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Japan set to launch fresh stimulus package: reports

business Updated: Feb 16, 2009 01:26 IST

Japan is set to launch a fresh stimulus package as the world's second largest economy faces a sizeable economic contraction, local media reported on Sunday.

Prime Minister Aso Taro will order his ruling Liberal Democratic Party (LDP) as early as Monday to start working out details of the package, the Yomiuri Shimbun and Japan's public broadcaster NHK said.

The government will aim at submitting an extra budget to parliament in April to finance the third stimulus since the global economic crisis deepened late last year, Yomiuri said.

Some ruling party officials are calling for a major stimulus boost which should include government spending of more than 10 trillion yen (109 billion dollars), the mass-circulation daily said.

Yoshihide Suga, a senior official of the LDP and a close aid to Aso, sought massive stimulus measures, telling a television interview: "We must take action as a matter of course. We have to do something drastic."

The planned package is likely to feature public projects such as reconstruction of airports, harbours, highways and school buildings, it said.

It may also cover measures to expand Japan's environmentally friendly businesses to counter the twin threats of climate change and the economic downturn, it said.

The move comes with the government scheduled to announce figures on Monday for gross domestic product for the October-December quarter, which some analysts say could show the first double-digit contraction since the mid-1970s.

"The current economic situations are severe," Bank of Japan governor Masaaki Shirakawa told reporters after this weekend's meeting of the Group of Seven financial chiefs in Rome.

Shirakawa signalled the central bank would maintain its easy monetary policy and consider measures to tackle a credit crunch when its policymakers are to hold a regular meeting on Thursday.

In December, Aso announced a stimulus package worth 23 trillion yen, in addition to a 26.9 trillion yen package unveiled in October.

Aso has pledged that Japan will be the first developed country to move out of recession, but Economics Minister Kaoru Yosano has warned it was impossible to say when Asia's biggest economy would bottom out.