Japanese Prime Minister Shinzo Abe announced a new 10.3tn yen (71.6bn-pound) stimulus package aimed at combating deflation and driving the recovery.

The plan "shows a clear commitment to economic revitalization", Abe said at a conference in Tokyo.

A statement for Japan's Cabinet Office showed that Abe plans to dedicate about 3.8tn yen (£26.4bn) for disaster prevention and reconstruction and another 3.1tn yen (£21.6bn) in an attempt to stimulate private investment.

The government office expects the extra spending to increase gross domestic product by about 2% and create approximately 600,000 jobs.

To pay for the package, Japan will compile an extra budget and some of the funding should come from the sale of about 5tn yen (£34.8bn) in government bonds.

Japan continues to be mired in recession after two quarters of consecutive contraction last year. Consensus expects the recession to continue with a 0.6% slowdown the last quarter of 2012, although growth of 1.6% is expected to return in the first quarter of this year.

JM

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