"Things made in China for the domestic market will stay, but for things made in China to export, the advantages, starting with labour costs, are declining"
- Wakamatsu, a Southeast Asia specialist at the government-affiliated Japan External Trade Organisation
Japanese government approved a 423 billion yen ($5.3 billion) economic stimulus package on Friday to shore up economic growth. The size of the stimulus is double the size originally expected, and it is aimed to encourage capital expenditure in order to provide the economy with the boost in the range of 0.1 per cent. However, it is a relatively small amount of money to rescue the world's third biggest economy from the recession.
"The risk of a Japanese fiscal cliff is quite big," said Soichi Okuda, chief economist at Sumitomo Shoji Research Institute in Tokyo. "Without the passage of the bill, the government can't pay for necessary spending and the implementation of the budget will be delayed."
"If they have an inflation goal of 2 percent or 3 percent they should pull out all stops to achieve it," said Matthew Circosta, an economist at Moody's Analytics in Sydney, Australia. "They've just got to be more aggressive than they are now," he said.
The Nikkei 225 Stock Average lost 0.04% per cent, or 3.72 points, to 8,929.34. The broader Topix Index was down 0.13% per cent, or 0.93 points, to 740.30.
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