Japanese PM announces new economic stimulus package

Japanese Prime Minister Taro Aso unveiled a 26.9 trillion yen (272 billion U.S. dollars) economic stimulus package to shore up the world's second largest economy in the face of the global financial crisis.

At a press conference, Aso said that the whole world is suffering from the financial rainstorm, and Japan's economy and financial system, though stable and firmer compared with those in the west, will certainly be affected.

The most important thing is to "assure the security of average households" and "allay concerns about their livelihood," he said.

Included in the package are credits and loans to support small businesses, a cut in regional highway tolls and notably 2 trillion yen in cash benefits to be delivered to households by the end of March, according to the prime minister.

In addition, there will be a cut in premiums for the national unemployment insurance program and incentives for companies to hire non-regular, part-time workers as full-time employees.

The stimulus package came in the wake of an 11.7 trillion yen supplementary budget approved by parliament.

With the collapse of the U.S. investment bank Lehman Brothers, the ripple of the financial crisis has spread to Japan.

On Monday, Tokyo stocks continued a downtrend with the key Nikkei index falling 6 percent to a fresh 26-year low at 7,162.97.

And the yen got stronger against most major currencies including the U.S. dollar, surging as much as 10 percent against the dollar last week alone. The yen's appreciation worsened the already darkening outlook for the nation's export-driven economy, hurting companies like Toyota and Sony by making Japanese good more expensive abroad and reducing the value of overseas profits when converted into yen.

The worsening economic situation makes it more difficult for smaller and medium-sized companies to get loans as banks become more cautious about their ability to make profits.

(Published by China View - October 30, 2008)