Japan may resume domestic travel subsidies as new pandemic-relief programme

Japan's government is considering resuming subsidies aimed at promoting domestic tourism as early as mid-January, the Nikkei newspaper reported on Sunday.

The move will ease the strain on airlines and hotels hit by shrinking travel from the coronavirus pandemic, and underscore hopes among policymakers to reflate the economy out of the doldrums through pent-up demand.

The subsidies will be part of Prime Minister Fumio Kishida's new pandemic-relief programme expected to be compiled on Friday.

As Covid-19 infections began to rise, Japan halted in December a programme that used taxpayers' money to offer domestic tourists discounts for hotels and domestic travel fees.

On request from the tourism industry, the government will consider resuming the programme from mid-January or February, until around late April, the Nikkei said.

The government will offer bigger discounts for travel during the weekdays compared with those on the weekend, to avoid trips being concentrated during the weekend, the paper said.

It will also lower the maximum amount of discount offered per travel compared with the previous programme, the Nikkei said without citing sources.

The government was not immediately available to comment.

Japan's economy likely contracted an annualised 0.8% in the third quarter as supply constraints and state of emergency curbs to combat the pandemic hit exports and consumption, according to a Reuters poll.

Analysts expect consumption to pick up after the Sept. 30 end of the curbs, though slowing Chinese growth and lingering supply bottlenecks cloud the outlook for the export-reliant economy. The government will release preliminary third-quarter gross domestic product data on Monday.

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