Japan vows to pull economy out of slump

Friday June 26, 2009

TOKYO: Japanese Prime Minister Taro Aso vowed Thursday to do more to pull the world's second-largest economy out of a recession, as he apparently tried to raise his approval rating before looming elections. Aso, who has introduced a series of stimulus measures aimed at sparking a turnaround since taking office last September, said that earlier steps have proven effective but ``not enough.'

He promised further measures, including support for young people who are out of jobs, as well as educational allowances for families with school children. The prime minister, who faces a vote by September at the latest, also called for more funding to cover ballooning social security costs. He said the government plans to go ahead with a consumption tax hike in 2012, only if the economy is back on track.

``People are not just worried about the current economic slump. They are concerned about many other things about our society,' Sao said. `We must address their concerns, one at a time.' The graying of society and the low birth rate is expected to strain government services and pension programs, as well as lead to labour shortages in the near future.

``Before heading into elections, I had to show how we plan to create a society that offers peace of mind,' Aso told a news conference. ``We'll win the elections and do the utmost to achieve the goal.' Aso refused to give the election schedule but said he planned to call a vote ``before long' rather than waiting until the lower house ends its term.

Polls showed support ratings for Aso's Cabinet drop to the single digits in February, but they have since recovered somewhat to around 20 percent. Another embarrassment hit Aso this week, as Economy Minister Kaoru Yosano faced an allegation that his political organisation accepted questionable donations from an investment company. Yosano denied any wrongdoing. Aso's Cabinet has lost three ministers over separate scandals and a policy dispute.

Candidates backed by the rival Democratic Party of Japan have won four out of six local elections this year, including the mayoral seat in the city of Chiba, near Tokyo, earlier this month. The opposition is well-placed to make major gains or even rise to power in the upcoming general elections. Aso's Liberal Democratic Party has governed Japan for virtually all of the past 50 years.

Since late last year, his government has endorsed several stimulus measures, including the latest $150 billion package that consists of programs to bolster consumer spending and incentives to buy energy-efficient appliances and cars, as well as help for the unemployed and small businesses.

(AP)