Japan tries to boost economy with spending

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TOKYO, Dec 24 (Reuters): Japanese Prime Minister Taro Aso tried to put a rocket under the stricken economy Wednesday, announcing the country's biggest ever annual budget, as fear mounts that Japan faces a long recession.
However, the fate of the budget is clouded by Aso's sinking public support rates and weakening control over his Liberal Democratic Party, which analysts say is at risk of losing a lower house election that must be held by next September.
The budget for the fiscal year starting next April, along with two other extra budgets for the current year, will finance Aso's 12 trillion yen in fiscal stimulus programmes, which amounts to more than two per cent of Japan's gross domestic product.
Ministers said the stimulus was as large as or even larger than steps adopted in other major economies. But it also meant Japan's primary budget deficit will nearly triple, making Tokyo's target of a surplus in two years almost impossible.
The global turmoil has already pushed much of the world's economy into recession, prompting policymakers to dish out trillions of dollars in bailouts and fiscal stimulus packages and drive borrowing costs ever closer to zero.
"Japan cannot avoid the tsunami of the world recession, but it can try to find a way out," Aso told a news conference, in which he illustrated the government's stimulus plans with a diagram of a three-stage rocket.