The massive investment plan announced by Japanese Prime Minister Sanae Takaichi has begun to raise concerns among investors and financial analysts.
The plan targets more than ¥370 trillion (around US$2.3 trillion) in public and private investment over 14 years to stimulate the country's economic growth.
However, the main questions that arise are how the plan will be financed and whether it will be able to produce economic growth as promised.
The Japanese government has not yet explained in detail the amount of additional spending that the government will have to bear.
This situation has led analysts to expect that the government may have to issue more government bonds to raise funds.
If that happens, the higher supply of bonds has the potential to raise long-term interest rates and put pressure on the country's debt market.
Some market experts believe that the plan could have a negative impact on the Japanese bond market.
Although the government projects fiscal spending of around ¥10 trillion per year, there is still uncertainty about whether the planned investments will succeed in boosting economic growth.
As a result, investors may demand higher returns to compensate for the increased risk.
This concern was also reflected in the auction of 20-year Japanese government bonds, which recorded the weakest demand since May 2025.
At the same time, Japanese insurers and global fund managers have reportedly started to reduce their holdings of long-term government bonds.
According to analysts, the investment plan is likely to increase pressure on long-term interest rates in the near term.
This is because the government needs to increase spending first, while the benefits of economic growth will only be felt in the future.
This situation could cause Japan's debt-to-GDP ratio to increase temporarily before any economic benefits can be realized.
