Japanese stimulus package gets cabinet approval

Japan's cabinet approved a fresh economic stimulus package on Tuesday worth more than 28 trillion yen ($356.72 billion Cdn), Prime Minister Shinzo Abe's latest effort to get the stalling recovery back on track.

Abe called the package, part of a supplementary budget for the parliament to approve in an extraordinary session starting in September, "an investment for the future."

It focuses on Japan's agriculture and tourism, and on providing support for the child and elder care industry to enable more women to work full-time, since the labor force is shrinking as the population ages.

• Japan introduces negative interest rate
• Japanese economy contracts 0.8% in new recession

Japan's economy has stagnated for years, with short spurts of faster growth, as companies have focused investments in faster-growing markets overseas.

Economists said the measures approved Tuesday include a total of only 7.5 trillion yen ($95.55 billion Cdn)in government spending, spread over a number of years. The rest is meant to be subsidized lending and private sector spending.

"Publishing a vastly inflated headline spending figure is nothing new, and especially popular during times of acute crisis," Marcel Thieliant of Capital Economics said in a commentary.

He said the official forecast that the package would boost Japan's GDP by only 1.3 percentage pointsreflected that "the government doesn't believe its own numbers."

Big public debt

Public works projects that would be covered by deficit bonds are also raising concerns because of their possible impact on Japan's already huge public debt, which is more than twice the size of its economy.

Since Abe took office in late 2012, he has sought to boost growth by pumping massive amounts of money into the world's third-biggest economy. But lavish monetary easing and public works spending so far have failed to reignite growth as much as hoped.