Japan’s parliament has passed a stimulus package worth
about $61bn, designed to kick-start the country’s fragile economic recovery.
The stimulus was designed to create jobs, Prime Minister
Nato Kan said, through measures to help small businesses and boost consumer
spending.
The government has already introduced several stimulus
packages.
Earlier, figures showed that Japanese consumer prices
fell for the 20th month in a row in October.
The vote in favour of the latest stimulus measures
represents a victory for the government, which has struggled to get the package
through parliament.
The move is in marked contrast to European governments’
policies, which are focusing on cutting spending to secure growth.
Japan has been struggling with weak growth, a high yen
and deflation.
The core consumer price index fell by 0.6% in October
compared with a year earlier, official figures showed.
This was a slight improvement on the 1.1% price falls
seen in September.
Deflation is particularly damaging to economic growth as
consumers delay purchases until prices fall further.
The improvement from September does not reflect any
improvement in consumer demand, analysts said.
“Even though the pace of the fall in prices slowed
by 0.5 percentage points, this was not due to an improved demand-supply
balance,” said Asushi Matsumoto at the Mizuho Research Institute.
Instead, he said, it was down to one-off factors, such as
a hike in cigarette prices.
This means that “exit from deflation will be slower
than previously thought,” Mr Matsumoto argued.
Japan is also struggling with a strong yen, which makes
exports more expensive to overseas consumers.
Figures released on Thursday showed export growth slowing
for the eighth month in a row, with exports to Europe falling for first time
for almost a year.
Analysts say weaker exports could also contribute to
reduced consumer demand.
“Weak growth in exports could worsen corporate
earnings, thus lowering household incomes to dampen consumer demand,” Mr
Matsumoto said.
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