JAPAN SET TO INTRODUCE PACKAGE TO STIMULATE ITS WEAK ECONOMY

JAPAN SET TO INTRODUCE PACKAGE TO STIMULATE ITS WEAK ECONOMY

Japan plans to unveil a 14.7 trillion yen ($141 billion) economic stimulus package today, to try to revive its economy in an attempt that economists doubt will work.

The package, the size of which was disclosed to Reuters by a government source on Tuesday, will be Japan's third in only six months, and is expected to contain measures to help the country's feeble economy.Top of the list will be large sums for new public works projects to expand domestic demand, the source said.

However, private economists think new government spending can give only limited help to the economy, which has been stalled for several months after earlier appearing to start to recover from the recession of the past few years.

Instead, it will likely recover only with an increase in private sector spending as consumers open their purses and corporations invest more.

"Until we get private consumption and private capital spending expanding simultaneously, we don't have the fundamentals for a strong economy," said Chris Calderwood, an economist for Barclays de Zoete Wedd.

Meanwhile, the nation's chief economic planner said on Tuesday that the package would give the economy a satisfactory boost if it were followed by further measures.

Isamu Miyazaki, minister of the government's Economic Planning Agency, told reporters that the package would have to be followed by solutions to the problem of bad loans burdening financial institutions, changes in taxation, medium-term economic plans and a draft for next year's national budget if Japan was to ensure economic recovery.

Financial markets are eagerly awaiting the package, but traders said they do not expect any big market reaction unless it contains surprises.

"The market is probably going to shrug off this package as it does not have much substance," Schroder Securities economist Andrew Shipley told Reuters Financial Television.

The package will also allocate money to help central and local governments speed up plans to buy land for public use to increased liquidity in the land market. This is aimed at relieving financial institutions of the burden of huge quantities of bad loans for which they hold land as collateral.

The package follows two others adopted in April and June. A supplementary budget of 2.73 trillion yen ($27 billion) was put together for this fiscal year to finance the April package.

A second extra budget designed to finance the latest package is expected to exceed four trillion yen ($39 billion).

Government officials have said the package will not include reforms in land and corporate tax, which economists say would have favorable effects on the economy.