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Japan to launch 'fresh stimulus package'

Prime Minister Aso Taro will "shortly" announce a plan to compile the fresh economic package, Yoshihide Suga, a senior official of Aso's ruling Liberal Democratic Party (LDP), told reporters.

Some LDP members already suggested that the package should be worth 20 trillion yen to 30 trillion yen (217 billion yen to 326 billion yen), Suga said, adding: "I think we need such a size."

Earlier in the day, the close aide to Aso also told a television interview: "We must take action as a matter of course. We have to do something drastic."

In December, Aso announced a stimulus package worth 23 trillion yen, in addition to a 26.9 trillion yen package unveiled in October, as Japan has been in recession in the wake of the global economic crisis.

The Yomiuri Shimbun newspaper and Japan's public broadcaster NHK reported on Sunday that Aso would order the LDP as early as Monday to start working out details of the planned package.

The government will aim at submitting an extra budget to parliament in April to finance the third stimulus since the global economic crisis deepened late last year, the Yomiuri said.

The planned package is likely to feature public projects such as reconstruction of airports, harbours, highways and school buildings, the mass-circulation daily said.

It may also cover measures to expand Japan's environmentally friendly businesses to counter the twin threats of climate change and the economic downturn, the newspaper said.

The move comes with the government scheduled to announce figures on Monday for gross domestic product for the October-December quarter, which some analysts say could show the first double-digit contraction since the mid-1970s.

"The current economic situations are severe," Bank of Japan governor Masaaki Shirakawa told reporters after this weekend's meeting of the Group of Seven financial chiefs in Rome.

Shirakawa signalled the central bank would maintain its easy monetary policy and consider measures to tackle a credit crunch when its policymakers are to hold a regular meeting on Thursday.

Aso has pledged that Japan will be the first developed country to move out of recession, but Economics Minister Kaoru Yosano has warned it is impossible to say when Asia's biggest economy will bottom out.