Japan Government to Spend 1 Trillion Yen on Next Stimulus

The Japanese government will spend 1 trillion yen ($12.3 billion) on a second round of fiscal stimulus as it tries to revive an economy at risk of sliding into recession.

The government will tap reserve funds from this fiscal year’s budget, Chief Cabinet Secretary Osamu Fujimura told reporters in Tokyo today. The latest measures follow the announcement of 750 billion yen of stimulus last month.

Economy Minister Seiji Maehara said last week that using reserve funds won’t be enough to support the economy and the government should compile a supplementary budget. The Bank of Japan (8301) refrained today from adding to monetary stimulus, with most analysts in a Bloomberg News survey forecasting more easing in December.

The dissolution of the Diet prior to the election on Dec. 16 may restrict the government’s ability to stimulate an economy that risks its third technical recession since 2008.

The economy will contract an annualized 0.4 percent in the September-to-December period according the median forecast in a survey of economists by Bloomberg News after shrinking 3.5 percent in the third quarter. A textbook recession means two straight quarters of contraction.

Japanese recessions are officially defined by a government- charged panel that considers data beyond GDP figures.

To contact the reporter on this story: Takashi Hirokawa in Tokyo at thirokawa@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net

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Japan Government to Spend 1 Trillion Yen on Next Stimulus Round

Akio Kon/Bloomberg

Customers browse packaged fish in a Seiyu GK supermarket in Tokyo.

Customers browse packaged fish in a Seiyu GK supermarket in Tokyo. Photographer: Akio Kon/Bloomberg