TOKYO (Reuters) - The Japanese government and ruling parties are considering a fresh stimulus package that could include up to 20 trillion yen ($218 billion) in fiscal spending to bolster the economy, Japan’s Kyodo news agency reported.
Citing unidentified sources familiar with the matter, Kyodo reported on Sunday Tokyo is hoping to compile the package ahead of the summit meeting of the Group of 20 economies on April 2.
Talk of the additional stimulus package, which would follow a planned 12 trillion yen spending, comes as the Japanese economy is in one of its severest recessions in modern history.
Data due on Monday is expected to show the economy shrank 3.1 percent in the last three months of 2008, or an annualised 11.7 percent, which would be the worst performance since the first quarter of 1974.
The global economic slump has virtually frozen Japanese exports and production of cars and electronics, hitting the heart of the export-oriented economy.
Prime Minister Taro Aso is expected to formally instruct the government and the ruling party officials to study additional economic measures, after the release of the preliminary GDP data, Kyodo reported.
Still, with Aso’s popularity plummeting, the plan could further complicate debate in the parliament, where opposition parties are opposing the government’s budget for 2009/10, which will finance part of stimulus package Aso compiled last year.
Ichiro Ozawa, leader of the main opposition Democratic Party, said the compilation of extra stimulus measures would be tantamount to admitting that the budget Aso has submitted to the parliament is flawed, Kyodo said.
Government and ruling party officials could not be reached immediately for comment on the report.
Public support for Aso’s cabinet has slumped to 9.7 percent, broadcaster NTV said on Sunday, a level that will likely boost calls to replace him ahead of an election this year.