30 Aug 2008

Economic boost plan in Japan

6:41 am on 30 August 2008

Japan has issued a stimulus package worth 11.7 trillion yen ($US107 billion) to boost the country's economy.

The government hopes that it will help people cope with rising prices and stave off a recession.

The plan includes only 2 trillion yen of fresh government spending, with 9 trillion yen in loan guarantees and aid for small businesses.

It also includes discounts on motorway tolls, assistance to farms and help for part-time workers to find better jobs.

The measures do not include temporary income tax cuts advocated by the New Komeito Party, a junior coalition party.

Japan's economy is struggling: the economy shrank between April to June and will be technically in a recession if GDP contracts between July and September.

On Friday, data showed that industrial output rose by 0.9% in July, but economists said that the stronger-than-expected figure did not ease fears of a recession.

Other figures released on Friday showed Japan's unemployment rate fell from 4.1% to 4%, while core inflation rose to 2.4%.