Japan provides more stimulus
By Tomoko A. Hosaka |
December 9, 2009, Wednesday
|
Print Edition
Print Edition
JAPAN'S government yesterday unveiled nearly US$81 billion of new stimulus spending to keep the world's second-biggest economy from lurching back into recession.
Despite shrinking tax revenue, Japanese Prime Minister Yukio Hatoyama and his Cabinet agreed to 7.2 trillion yen (US$80.6 billion) in new spending after days of negotiations with coalition partners. The announcement had been expected last Friday but was delayed by wrangling over the size of the plan.
The largesse underlines that the world's biggest economies are still too fragile to get by without government life support even as a recovery from the global recession takes shape. In export-reliant Asia that's partly because demand from Europe and the United States is improving only tepidly and efforts to reduce dependence on trade by boosting consumer spending will take several years to fully bear fruit.
Japan also faces falling prices while brand-name exporters like Toyota Motor Corp and Sony Corp are losing record amounts of money as a galloping yen adds to their woes.
China, which has bounced back strongly, still vowed on Monday to keep its proactive fiscal policy and moderately easy monetary policy in place.
Meanwhile, US President Barack Obama is looking at using some US$200 billion leftover from the pot of money for bank bailouts to finance job creation schemes - spending that would come on top of the US$787 billion stimulus approved earlier this year.
The new Japanese package is Hatoyama's first major policy deal since his Democratic Party swept into power this summer promising help for workers and families. Since then, the country's economic turnaround has been under threat from intensifying deflation and a strong yen.
He also faces pressure to improve his approval ratings before upper house elections next year. The previous government under former Prime Minister Taro Aso injected 25 trillion yen in stimulus spending.
After enduring its worst recession since World War II, Japan's economy grew for the second straight quarter in the July-September period, expanding at an annualized pace of 4.8 percent.
The growth was the strongest in more than two years thanks to previous stimulus measures and improvement in global demand.
Despite shrinking tax revenue, Japanese Prime Minister Yukio Hatoyama and his Cabinet agreed to 7.2 trillion yen (US$80.6 billion) in new spending after days of negotiations with coalition partners. The announcement had been expected last Friday but was delayed by wrangling over the size of the plan.
The largesse underlines that the world's biggest economies are still too fragile to get by without government life support even as a recovery from the global recession takes shape. In export-reliant Asia that's partly because demand from Europe and the United States is improving only tepidly and efforts to reduce dependence on trade by boosting consumer spending will take several years to fully bear fruit.
Japan also faces falling prices while brand-name exporters like Toyota Motor Corp and Sony Corp are losing record amounts of money as a galloping yen adds to their woes.
China, which has bounced back strongly, still vowed on Monday to keep its proactive fiscal policy and moderately easy monetary policy in place.
Meanwhile, US President Barack Obama is looking at using some US$200 billion leftover from the pot of money for bank bailouts to finance job creation schemes - spending that would come on top of the US$787 billion stimulus approved earlier this year.
The new Japanese package is Hatoyama's first major policy deal since his Democratic Party swept into power this summer promising help for workers and families. Since then, the country's economic turnaround has been under threat from intensifying deflation and a strong yen.
He also faces pressure to improve his approval ratings before upper house elections next year. The previous government under former Prime Minister Taro Aso injected 25 trillion yen in stimulus spending.
After enduring its worst recession since World War II, Japan's economy grew for the second straight quarter in the July-September period, expanding at an annualized pace of 4.8 percent.
The growth was the strongest in more than two years thanks to previous stimulus measures and improvement in global demand.
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