Japan reveals plans to boost economy

In a bid to boost its economy, Japan has revealed a stimulus package worth 11.7 trillion yen (£59 billion).

It is hoped that the package will help citizens cope with rising fuel and food prices and help agricultural and fishing businesses affected by soaring costs. It also aims to reduce expressway tolls, increase medical services for the elderly and help small-medium sized companies struggling owing to the rise of commodity prices.

The package includes 2 trillion yen of fresh government spending, with 9 trillion yen in loan guarantees and aid for small businesses.

However, this is much less than the $167 billion that the US spent on tax rebates and other measures to revive its economy and stave off a recession.

Japan’s economy contracted between April to June and according to reports, if gross domestic product contracts between July and September, then the country will be technically in a recession.

Other figures released show that the unemployment rate in Japan fell from 4.1% to 4%, while core inflation increased to 2.4%.

It is widely believed by analysts that despite concerns of an economic slowdown in the country, it is likely that the Bank of Japan will keep interest rates the same.

In related news, the latest figures from the Commerce Department revealed that the US economy grew at a revised 3.3% annually in the second quarter of 2008 against a previous estimate of 1.9%.

Analysts believe this makes recession less likely. Avery Shenfeld, senior economist at CIBC World Markets, argues that the US is still an economy that faces slow times but not a recession.

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