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Japan unveils $81 billion economic stimulus

Japan's government agreed on a ¥7.2 trillion ($81 billion) stimulus package on Tuesday, aiming to prevent the economy from tipping back into recession as deflation persists and a strong yen threatens exports.

Economists said the spending, equal to about 1.5% of gross domestic output, would not provide a significant lift to an economy dependent on overseas demand for machinery, electronics and cars.

The package was due to be compiled on Friday but the ruling party was forced to add ¥100 billion in spending to appease a small coalition partner whose support is needed to enact legislation smoothly.

The budget underscores the balancing act faced by Prime Minister Yukio Hatoyama and his Democratic Party, which is keen to avoid a recession ahead of an upper-house poll next year but also needs to fulfill its promise of fiscal discipline. (Reuters)