TOKYO: Japan’s finance minister said yesterday that the government may have to spend a further $200 billion to revive the stricken economy, which he warned faced another sharp contraction this quarter.
The comments suggest that Tokyo plans to dig deep into the public coffers for a third stimulus package currently being put together to battle what is feared to be Japan’s worst recession since World War II. “It’s not a situation where new fiscal spending of two to three trillion (yen) would be enough as a remedy,” Finance Minister Kaoru Yosano told a television news program.
A figure of around 20 trillion yen ($208 billion) is “not out of line with my hunch,” he said, but added that the size of the package had not yet been decided.
Prime Minister Taro Aso last week ordered another stimulus to pump up Asia’s largest economy, following two earlier packages worth a total of about 50 trillion yen, including some non-spending measures such as loan guarantees.
Japan’s economy logged its worst performance in almost 35 years in the last quarter of 2008, contracting at an annualized pace of 12.1 percent.
