Prime Minister Junichiro Koizumi will promise to secure nominal economic growth of at least 2 percent by fiscal 2006 in his policy package for the upcoming Liberal Democratic Party presidential election, a key aide said Sunday.

“The prime minister will pledge to get the country out of the deflationary phase and target nominal growth in the 2 percent range by fiscal 2006,” Hidenao Nakagawa, head of the LDP’s Diet affairs committee, said on Fuji TV on the eve of the start of official campaigning for the Sept. 20 race.

Senior LDP members, including Executive Council Chairman Mitsuo Horiuchi, an anti-Koizumi faction leader who has decided to support the prime minister in the election, had urged Koizumi to include the nominal growth target in his policy package.

Until last week, Koizumi had been reluctant to include a numerical target, saying the government already has a midterm growth forecast and it would be unnecessary to set it as an election pledge.

In a deflationary environment, nominal growth of gross domestic product is less than real growth, which is calculated after adjusting price rises. In fiscal 2002, real GDP growth came to 1.6 percent, but in nominal terms the economy contracted 0.7 percent.

Koizumi’s key economic panel said in its economic forecast in January that nominal growth in fiscal 2006 is expected to be 2.2 percent.

The inclusion of the numerical target in the policy pledge apparently is a show of Koizumi’s consideration for Horiuchi and other senior party members who are demanding greater emphasis on economic policies to combat deflation.

Koizumi has stressed, however, that his structural reform drive to cut government spending will not change.

The three candidates who will challenge Koizumi all appeared on TV Sunday to present their policies.

Former policy chief Shizuka Kamei, former Foreign Minister Masahiko Komura and former transport minister Takao Fujii all stressed the need for large government spending on public works to prop up the economy, with Kamei and Fujii calling for a supplementary budget worth at least 10 trillion yen.

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