- The Washington Times - Friday, March 13, 2009

TOKYO (AP) - Japan’s Prime Minister Taro Aso called Friday for a fresh stimulus package to help lift the world’s second-largest economy out of one its worst slumps since World War II.

“We are facing an unprecedented economic crisis. The ruling parties should make their utmost efforts to help (the nation) ride out this difficulty,” Aso told top officials from his ruling Liberal Democratic Party and its coalition partner, the New Komeito Party.

Aso’s order for the new stimulus package cheered investors, boosting the benchmark Nikkei 225 index by 371.03 points, or 5.2 percent, to close at 7,569.28.

It comes a day after the government said Japan’s economy shrank at a 12.1 percent annual rate in the October-December quarter, slightly better than the initial estimate of a 12.7 percent contraction, but still its sharpest contraction in 35 years.

Since taking office in September last year, Aso has repeatedly said restoring Japan’s economy is the top priority of his government.

Faced with dismal public approval ratings, he has launched a one-time cash handout of 12,000 yen, or about $120 per person, as the centerpiece of a recent stimulus package to revive the economy.

Aso’s government has also written a record 88.5 trillion yen ($904.7 billion) budget for the next fiscal year starting in April. In February, Japan’s powerful lower house of parliament passed the budget, which include measures to boost employment and public works projects.

An official for the Liberal Democratic Party said Friday the ruling parties aim to compile the new stimulus package by the end of March, but declined to give further details.

Quoting sources close to Aso, Japan’s top-selling daily, the Yomiuri newspaper, said Friday the size of the package is expected to reach at least 20 trillion yen.

The paper said the package will focus on public works, the environment and social welfare. It may include tax cuts.

Japan’s economy has shrunk for three straight quarters and is almost certainly headed for a fourth quarter of contraction amid a deepening global downturn.

Like its Asian neighbors, the export-driven economy has been pummeled by the U.S. financial crisis, which morphed into plunging global demand for its cars and gadgets.

Japan’s exports plummeted a record 13.8 percent in the fourth quarter from the third quarter, the government said Thursday. Capital expenditure _ business investment in factories and equipment _ fell 5.4 percent from the previous quarter.

Iconic exporters including Toyota Motor Corp. and Sony Corp. _ both of which are forecasting annual losses _ have reduced shifts, suspended factory lines and announced thousands of job cuts over the past few months.

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