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Japan to kickstart economy

October 26, 2012

In an effort to stop falling prices and sagging growth, Japan will pump billions of fresh yen into its economy. The stimulus will mainly target regions hit by the 2011 earthquake and tsunami.

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Image: Hiroto Nomoto/AP/dapd

The government of Prime Minister Yoshihiko Noda has approved additional spending to the tune 422 billion yen (4.06 billion euros, $5.28 billion) in an attempt to boost the country's stuttering economy.

"We hope the package will lead to an exit from deflation and jumpstart the economy," Chief Cabinet Secretary Osamu Fujimura told a news conference in Tokyo on Friday. Japan's economy grew by only 0.7 percent in the second quarter of 2012 amid signs of deflation such as falling prices and shallow growth.

The stimulus package earmarks about 260 billion yen for disaster reconstruction in Japan's northeast, which was hit by an earthquake and a tsunami in 2011. About 17 billion yen are to be used to strengthen the country's coast guard in the face of mounting tensions with China over disputed islands in the East China Sea.

In addition, the cash injection aims to boost renewable energy businesses as well as agriculture, forestry and fisheries.

Fujimura said the government expected the stimulus package to increase Japan's gross domestic product (GDP) by at least 0.1 percent this year.

uhe/pfd (dpa, AFP, Reuters)