TOKYO - Japan's Cabinet on yesterday approved
about 3.5 trillion yen ($29 billion) in fresh stimulus, including subsidies and
job creation, to help pull the world's third-largest economy out of recession.
The Cabinet endorsed the plan
proposed by Prime Minister Shinzo Abe as it wrapped up work for 2014. It
includes 420 billion yen ($3.5 billion) earmarked for helping stagnant regional
economies.
Abe took office for a third term
on Wednesday and faces strong pressure to do something to restore growth after
a sales tax hike in April put Japan back in recession.
Data released Friday showed
inflation eased slightly in November as household spending dropped, hindering
the government's effort to get the economy out of recession and back to
sustainable growth.
Japan's central bank is buying up
to 80 trillion yen ($660 billion) in assets each month, mostly government
bonds, to help spur inflation, but so far has not attained its target of 2
percent price increases overall. Since wage increases have not kept pace with
inflation, rising share prices and corporate profits have done little to
stimulate consumer demand, apart from a rush of purchasing ahead of the April
tax hike.
A large share of the proposed
support for local governments will be handouts to local governments, to be used
for shopping vouchers to entice people to spend more. The government will also
provide funds to back loans to small and medium size businesses that have
struggled with rising costs thanks to a weakening in the yen, which has boosted
the prices Japanese pay for energy, food and other imported goods.
Another key aim is to ensure improved job
prospects for young Japanese in regions that are suffering from severe
population decline as jobseekers crowd into the cities.
The government set targets for
creating new jobs and for encouraging city dwellers to move to the countryside.
One proposal calls for moving some government research institutes to the
provinces, and away from Tokyo.
By: (Associated Press)
Post a Comment