Japan mulls stimulus for wilting economy

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Japan mulls stimulus for wilting economy

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Japan’s leaders are considering fresh stimulus measures to counter a sharp slowdown in the country’s fragile economy.

Adding to the problem of slow growth is the strong value of the yen which is hitting exports.

The dilemma facing Prime Minister Naoto Kan is that he has promised to cut Japan’s massive debt, so he has had to ask his cabinet to come up with measures that do not include new spending such as tax and regulatory reforms.

Kan told reporters: “By the end of August, based on our discussions, we will decide what kind of steps we will take.”

He added “It seems possible to boost demand or stimulate the economy without depending on fiscal spending.”

Japan’s growth since it emerged from recession last year had been solid, but in the second quarter it suddenly wilted, due to weak domestic demand.

With exports under pressure from the stronger yen, the government and central bank have to decide if they intervene.

The finance minister has spoken with his G7 counterparts but analysts said it is unlikely there would be coordinated international action on the yen.