Tokyo yesterday approved US$10.7 billion in fresh spending to help boost Japan’s limp economy, just weeks before an election the ruling party is expected to lose.
The ￥880 billion (US$10.7 billion) in spending was more than double a package announced in October as the country gets set for polls that are expected to usher in Japan’s seventh prime minister in six years.
However, the move, which came as official data showed Japan posted a surprise uplift in factory production in October, threatened to trigger vote-buying criticism from opposition lawmakers.
Photo: EPA
The spending will focus on boosting growth in a range of sectors, including healthcare and agriculture, as well as on public works projects following last year’s earthquake and tsunami disaster.
Opinion polls suggest Prime Minister Yoshihiko Noda and his Democratic Party of Japan (DPJ) will be defeated by the country’s main opposition leader Shinzo Abe, who heads the Liberal Democratic Party (LDP).
Abe has vowed to spend heavily on public works and pressure the Bank of Japan into launching aggressive monetary easing measures to boost growth if his party wins the Dec. 16 vote.
The central bank has unveiled two policy easing measures in recent months as its counterparts in the US and Europe launched huge moves to counter slowing growth.
Japan’s economy contracted in the July to September quarter, nudging it toward recession and dousing hopes that the nation had cemented a recovery after last year’s twin disasters, which triggered the worst atomic crisis in a generation.
Masamichi Adachi, a senior economist at JPMorgan Securities, questioned the effectiveness of the latest government stimulus measures.
“While [the package] wouldn’t be a poison, it wouldn’t be a medicine either,” Adachi told reporters.
A glimmer of hope emerged yesterday as official data showed Japan’s factory output rose 1.8 percent in October, the first rise in four months and beating market expectations of a 2.2 percent drop.
Separate figures showed the jobless rate held steady while household spending for the month was better than expected, suggesting a possible improvement in consumer confidence.
The unexpected output jump — and a producers’ survey that forecast a 7.5 output rise this month after a small decline for last month — gave the Tokyo stock market a small boost with the benchmark Nikkei 225 index adding 0.48 percent by the close.
However, the economy ministry doused hopes that the latest data was something to cheer about, saying in a statement that output was on a “downward trend.”
Credit Agricole economist Kazuhiko Ogata cautioned against optimism, saying a sustained recovery would depend on stronger overseas demand for Japanese exports, while producers will have to bring down their built-up inventory.
“A bottom-out of production would be confirmed only after the turn of the year at the earliest,” Ogata said.
Chris Tedder, research analyst at Forex.com in Sydney, said the new figures quelled “some concern of a prolonged slowdown in the world’s third-largest economy.”
However, “overall, the data isn’t enough to turn us away from predicting a recession in Japan this quarter,” he said.
As weak European markets dent demand for Japanese exports, a territorial row over islands in the East China Sea claimed by Tokyo, Taipei and Beijing has also affected the trade balance owing to a consumer boycott of Japanese brands.
Japan’s top three automakers — Toyota, Nissan and Honda — all reported that the row with China has affected sales and profits, with October data on Thursday showing a marked drop output in China, the world’s biggest vehicle market.
Taichung reported the steepest fall in completed home prices among the six special municipalities in the first quarter of this year, data compiled by Taiwan Realty Co (台灣房屋) showed yesterday. From January through last month, the average transaction price for completed homes in Taichung fell 8 percent from a year earlier to NT$299,000 (US$9,483) per ping (3.3m²), said Taiwan Realty, which compiled the data based on the government’s price registration platform. The decline could be attributed to many home buyers choosing relatively affordable used homes to live in themselves, instead of newly built homes in the city’s prime property market, Taiwan Realty
The government yesterday approved applications by Alphabet Inc’s Google to invest NT$27.08 billion (US$859.98 million) in Taiwan, the Ministry of Economic Affairs said in a statement. The Department of Investment Review approved two investments proposed by Google, with much of the funds to be used for data processing and electronic information supply services, as well as inventory procurement businesses in the semiconductor field, the ministry said. It marks the second consecutive year that Google has applied to increase its investment in Taiwan. Google plans to infuse NT$25.34 billion into Charter Investments Ltd (特許投資顧問) through its Singapore-based subsidiary Fructan Holdings Singapore Pte Ltd, and
JET JUICE: The war on Iran’s secondary effects have seen fuel prices skyrocket, knocking flight schedules down to earth in return as airlines struggle with costs Airline passengers should brace for more irritation in the next few months as carriers worldwide cancel flights and ground planes to cope with stratospheric increases in jet-fuel prices. Dutch flag carrier KLM is the latest company to cut its schedule, saying on Thursday that it would scrap 80 return flights at Amsterdam’s Schiphol Airport in the coming month. That puts it in the same league as United Airlines Holdings Inc, Deutsche Lufthansa AG and Cathay Pacific Airways Ltd, which have all pruned itineraries to mitigate costs. Global capacity for next month has been reduced by about 3 percentage points, with all
Micron Technology Inc is a driving force pushing the US Congress to pass legislation that would put new export restrictions on equipment its Chinese competitors use to make their chips, according to people familiar with the matter. A US House of Representatives panel yesterday was to vote on the “MATCH Act,” a bill designed to close gaps in restrictions on chipmaking equipment. It would also pressure foreign companies that sell equipment to Chinese chipmaking facilities to align with export curbs on US companies like Lam Research Corp and Applied Materials Inc. The bill targets facilities operated by China’s ChangXin Memory Technologies Inc
RSS