Prime Minister of Japan, Shinzo Abe, is attempting to push through a Y3.5 billon (Aus $37 billion) stimulus package. The plan for the package is to pull the world’s third-largest economy out of recession through subsidies and job-creation programs.

Prime Minister Abe assumed office for a third term on Wednesday. He is under immense pressure to restore growth to the ailing Japanese economy after almost nine months of recession.

Unfortunately recent data has shown household spending dropped by 2.5 per cent in November, thereby stalling the effort of the government to increase the flow of money though the economy. At the same time food prices (a core consumer price signifier) rose 2.7 per cent; while inflation (excluding food and energy) dropped from 2.9 per cent in October to sit at 2.1 per cent. Average incomes fell 1.1 per cent, while unemployment remained steady at 3.5 per cent.

Regional sectors of Japan are earmarked to receive around 420 billion yen in an attempt to kick-start the many stagnant local economies. These measures will focus on providing greater support to low income families.

The stimulus package will also see the government backing loans to small and medium sized businesses. Many firms relying on imported goods have struggled to cope with higher costs bought about by a weakening yen.

Japan’s central bank is attempting to drive up inflation by buying up to 80 trillion yen of assets each month, largely government bonds. They have set the ambitious target of a two per cent price increase overall. To date wages have been unable to keep pace with inflation, and rising share prices, and ballooning corporate profits, have not flowed on to improve consumer demand.

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