Japan's ruling coalition has proposed a much larger fiscal stimulus package than expected. The extra budget for FY2019 and FY2020 could rise to JPY 10trn (USD 92bn), or around 2% of GDP. The move comes at a time when the Bank of Japan, which last month left rates unchanged at -0.1%, is facing diminishing returns from further monetary easing. Earlier this month BoJ governor Haruhiko Kuroda said that combining fiscal with monetary policy would have a bigger positive effect on the economy. The fiscal easing, which looks likely to be approved within a couple of weeks, could support growth – which we currently forecast at just 0.9% for this year and 0.4% for 2020.