JAPANESE Prime Minister Taro Aso sought new ways to stimulate the economy yesterday, as a 14.5 per cent dive in machinery orders provided further evidence the global financial crisis is pushing Japan into recession.
Tokyo has already prepared an US$18 billion stimulus package. But, a day after major central banks staged coordinated rate cuts to kick-start financial markets, Aso asked his ruling party to consider compiling another one.
"It is extremely unclear how financial market developments will affect the real economy, and we need to respond to it," Aso told reporters.
Lawmakers of the ruling Liberal Democratic Party met to discuss a package, which may include loans for small firms and corporate tax cuts.
The world's second-largest economy has so far proven more resilient than Europe and the United States in the face of global financial turmoil, and its banks have bought into US lenders hit by bad subprime debt.
The fear is that Japan will suffer as the crisis spreads beyond banking and markets.
The slide in machinery orders for August reinforced expectations that Japan is on the brink of recession, after the economy contracting at its fastest rate in seven years in the second quarter.
"There is a chance Japan's economy may contract again towards the end of this year and early next year. In this market environment, corporate revenues and sentiment could worsen further," said Yoshiki Shinke, a senior economist at Dai-ichi Life Research Institute.
In the midst of global panic alternating with cautious hope, Japan's benchmark Nikkei share average dipped slightly yesterday, after suffering on Wednesday its biggest one-day fall since the 1987 stock market crash.
The safe-haven yen hovered around ¥100 to the US dollar, not far from a six-month high hit on Wednesday. Japanese government bond futures dropped after a plunge in US Treasuries.
Unlike its East Asian neighbours, China, South Korea and Taiwan, Japan has not joined a round of interest rate cuts by central banks around the world, part of an effort to contain the worst global financial crisis since the Great Depression.Reuters
Tokyo has already prepared an US$18 billion stimulus package. But, a day after major central banks staged coordinated rate cuts to kick-start financial markets, Aso asked his ruling party to consider compiling another one.
"It is extremely unclear how financial market developments will affect the real economy, and we need to respond to it," Aso told reporters.
Lawmakers of the ruling Liberal Democratic Party met to discuss a package, which may include loans for small firms and corporate tax cuts.
The world's second-largest economy has so far proven more resilient than Europe and the United States in the face of global financial turmoil, and its banks have bought into US lenders hit by bad subprime debt.
The fear is that Japan will suffer as the crisis spreads beyond banking and markets.
The slide in machinery orders for August reinforced expectations that Japan is on the brink of recession, after the economy contracting at its fastest rate in seven years in the second quarter.
"There is a chance Japan's economy may contract again towards the end of this year and early next year. In this market environment, corporate revenues and sentiment could worsen further," said Yoshiki Shinke, a senior economist at Dai-ichi Life Research Institute.
In the midst of global panic alternating with cautious hope, Japan's benchmark Nikkei share average dipped slightly yesterday, after suffering on Wednesday its biggest one-day fall since the 1987 stock market crash.
The safe-haven yen hovered around ¥100 to the US dollar, not far from a six-month high hit on Wednesday. Japanese government bond futures dropped after a plunge in US Treasuries.
Unlike its East Asian neighbours, China, South Korea and Taiwan, Japan has not joined a round of interest rate cuts by central banks around the world, part of an effort to contain the worst global financial crisis since the Great Depression.Reuters
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