Finance Minister Kaoru Yosano said Sunday that aggressive public spending on a scale of possibly ¥20 trillion will be needed to wrest the economy out of recession.
Yosano, who also serves as financial services minister, acknowledged that the government forecast for flat growth for the next fiscal year will probably have to be revised soon to account for the deep contraction seen in recent months.
The economy has been battered by the plunge in exports that continues unabated since the U.S. financial crisis hit last year. The International Monetary Fund is expecting the Japanese economy to contract 5.8 percent for the 2009 calendar year.
The government has said the economy contracted at an annual pace of 12.1 percent for the October-December quarter. Data show the slowdown is dragging into this year.
“Unless there is considerable recovery in the latter half, it would be hard to keep it within the forecast,” Yosano said on a TV Asahi talk show.
Yosano stressed the amount of spending hasn’t been decided yet and experts need more data to decide on the right allocation, including where to spend the money. The effort will also need to be discussed in the Diet, he said.
But Yosano said the numbers being tossed around in recent media reports of ¥2 trillion or ¥3 trillion for the spending package aren’t enough to address the growing social woes such as joblessness.
“That is not enough to cope with what is happening in our society or is about to happen,” he said. “Speaking from a gut-level feeling, ¥20 trillion is a good number.”
The unemployment rate stood at 4.1 percent in January, relatively high for a nation that has valued stable employment for decades. Worries are growing the number will rise as companies go bankrupt and are hit with losses amid the global downturn.
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