Abe plans new Japan stimulus; Budget front-loading, Nikkei says

Japan's Prime Minister Shinzo Abe plans to announce a package of new spending measures to boost the economy.
Japan's Prime Minister Shinzo Abe plans to announce a package of new spending measures to boost the economy. PHOTO: AFP

TOKYO (Bloomberg) - Japanese Prime Minister Shinzo Abe plans to announce a package of new spending measures on Tuesday to boost the economy, the Nikkei newspaper reported, without saying where it obtained the information.

Abe will probably give details of the measures at a press conference the same day that Japan's 96.7 trillion yen (S$1.15 tillion) budget for fiscal 2016 is expected to become law, the newspaper reported. The new measures may include shopping vouchers, an increase in pay for nursery school teachers and public works projects, according to the newspaper.

Japan's economy contracted in two of the past three quarters, and sentiment among consumers, merchants and businesses has slumped. Abe may say this week he plans to front- load spending measures under the nation's regular budget, allowing the government to finance more projects this year, Nikkei said.

The government will probably decide on the size of stimulus and whether to proceed with a planned sales tax rise after seeing figures for first-quarter gross domestic product growth to be released May 18, the newspaper said. Some members of Abe's party favor a new stimulus package of about 10 trillion yen, according to the Nikkei.

A spokesman at the Japanese Prime Minister's office wasn't available for comment when contacted outside regular office hours.

Prices in Japan didn't rise in February, reinforcing just how far the nation remains from reaching the Bank of Japan's 2 per cent inflation goal. Stripping out energy and food costs, the gauge rose 0.8 per cent from last year, according to a statistics bureau report last Friday.

Japan's economy has weakened or is showing signs of weakness, according to 26 per cent of corporate leaders in a Nikkei survey carried out this month. That is up from 6.9 per cent in an earlier survey at the end of 2015, and respondents cited sluggish personal consumption and a stronger yen as factors weighing on the economy, the newspaper said.