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Japan unveils massive budget
(Agencies)
Updated: 2008-12-25 08:00
Japan's government approved its biggest-ever budget Wednesday to try to revive an economy hurt by the global financial crisis, and US data was expected to give further evidence of the worsening recession.
Governments across the world have tried to boost spending to ease a recession ushered in by a credit crisis in the United States when a housing market boom turned sour. "Japan cannot avoid the tsunami of the world recession, but it can try to find a way out," Japanese Prime Minister Taro Aso told a news conference, in which he illustrated the government's stimulus plan with a diagram of a three-stage rocket. "The world economy is in a once-in-a-hundred-years recession. We need extraordinary measures to deal with an extraordinary situation." Japan's cabinet approved a record 88.5 trillion yen ($980.6 billion) budget for the next fiscal year starting in April. The plan boosts overall spending, excluding debt servicing costs, by 9 percent compared with this year's initial budget and aims to accommodate part of 12 trillion yen in extra spending on government stimulus packages. But the budget could be held up in a divided parliament because of Aso's sinking public support and weakening control over his Liberal Democratic Party. Germany is also increasing spending. But Europe's biggest economy is planning a package of measures worth 25 billion euros, newspapers said. Germany has already pushed through measures it says are worth 31 billion euros but Chancellor Angela Merkel's government is under pressure to do more to boost the economy. European Central Bank chief Jean-Claude Trichet said markets were failing to value the measures taken by central banks and governments to ward off what he called a situation unprecedented since World War II. "There is an underestimation in the financial sphere of the very great importance of the decisions that were taken," Trichet said in a speech at a Paris think-tank on Tuesday. He called on governments in the euro zone to be wary of piling on debt to fund stimulus packages, saying it would do little to boost confidence in the economy or the markets. In the United States, home to the credit crisis, further evidence of how deep it has fallen into recession is expected with the release of weekly jobless claims, November durable goods and November personal income and consumption. Consumption is likely to have fallen 0.7 percent, while durable goods orders probably dropped 3.0 percent versus a 6.9 percent decline in October, according to Reuters surveys. Economists forecast 560,000 new filings for jobless benefits in the week ended Dec 20, compared with 554,000 in the prior week. |
