"Abe will probably give the economy more shots in the arm and turn a blind eye to fiscal discipline until the elections"
- Hiroaki Muto, a senior economist at Sumitomo Mitsui Asset Management Co.
The new Japanese government led by Shinzo Abe has approved another stimulus package to drive an economy from a recession. This is Abe's first major policy initiative to end deflation and boost growth in the country. The government will spend 10.3 trillion yen ($116 billion); with around 3.8 trillion yen of them will be aimed at the disaster prevention and reconstruction. Due to this action, nation's gross domestic product is expected to grow by 2%, while extra 600,000 jobs will be created. The world's third largest economy slid into a recession in the third quarter of 2012, after contracting for two consecutive quarters, as the economy was hit by a dip in exports amid slowing global demand and subdued domestic consumption.
"Abe will probably give the economy more shots in the arm and turn a blind eye to fiscal discipline until the elections," said Hiroaki Muto, a senior economist at Sumitomo Mitsui Asset Management Co. in Tokyo.
"Japan's economy has been very weak over the past couple of quarters and some stimulus is necessary to get the growth rate up at least over the near term," Thomas Byrne, senior vice president at Sovereign Risk Group, Moody's Investors Service, told CNBC Asia's "The Call."
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