TOKYO - Japan's Prime Minister, faced with fading support as the country struggles to maintain its fledgling economic recovery, Wednesday outlined a new set of measures to spur growth over the next decade.
The plan aims for the country's economy to expand at an average of two per cent over the next 10 years, with gross domestic product to grow to 650 trillion yen ($7 trillion) from the 473 trillion yen projected for the current fiscal year.
Final details are to be set by June of next year, ahead of nationwide elections for the upper house of parliament. That vote is seen as a major test for the new government, which swept to power this year by winning a majority in the powerful lower house, but has seen its popularity plunge by double digits in recent polls.
"With the understanding that the new government's ability to take action is being tested at this time, we will do whatever it takes to achieve this," Prime Minister Yukio Hatoyama told a news conference.
Hatoyama also said Japan would look to become less reliant on the U.S. economically and increase trade with its Asian neighbours, targeting a free trade zone in the region by 2020.
"Until now our connection with the U.S. has been very strong. Naturally this will continue to be the case in maintaining security. But in terms of economic growth, it is necessary to look closely at Asia as a new frontier," he said.
While the world's second-largest economy has shown some signs of recovery recently, including higher exports from its factories, deflation remains a major concern, and domestic demand is in a prolonged slump.
In the United States, the economy is recovering but unemployment is expected to remain high well into 2010. The Canadian economy is expected to grow by between three and four per cent in the current fourth quarter and is predicted to grow by 2.5 per cent next year.
In Japan, the new stimulus plan includes creating a US$540 billion market for environmentally friendly products and renewable energy that will create 1.4 million jobs. It also seeks to create 2.8 million jobs in the health and caregiving sectors, that will cater to Japan's aging population.
Last week, Japan unveiled a record $1 trillion budget for the next fiscal year, reflecting the prime minister's campaign pledge to boost spending for child support and cut wasteful outlays on public works.
The government forecast earlier this month that Japan's economy would grow 1.4 per cent next year, the first expansion in three years