Japanese economy to contract further with $210 billion needed as a stimulus

Japanese economy is expected to further decline with about 20 trillion yen ($210 billion) required in new stimulus spending according to the Finance Minister Kaoru Yosano. The minister told that the troubles suffered by the economy "not a situation where new fiscal spending of 2 to 3 trillion yen would be enough of a remedy”.

While the seize of a new package was not determined yet the figure of around 20 trillion yen is unlikely a seat-of-the-pants. According to Yosano economy may contract by 12.1% this quarter, the same figure recorded as annualized drop in the three months ended December.

Hence, the government will likely revise its estimate of zero growth for 2009, made in December, with the International Monetary Fund's estimate of a 5.8% contraction for the year possibly a more accurate forecast.