TOKYO (Reuters) – Japan will consider compiling a “large-scale, bold” additional fiscal stimulus package to cushion the economic blow from the coronavirus pandemic, ruling party heavyweight Toshihiro Nikai was quoted as saying by the Nikkei newspaper.

Nikai, the ruling Liberal Democratic Party’s secretary-general, said the government could compile a third extra budget to fund part of the package, the paper reported on Thursday.

“We’ve already taken ample measures to support firms under a second extra budget. But we’ll take bold, additional steps if necessary,” Nikai was quoted as saying.

Nikai said the party has not received specific requests for help from industries whose profits have been hit by the pandemic, such as carmakers and airlines, saying it was up to each sector to decide whether companies need to consolidate to stay afloat.

“We’d like to take effective measures to support the economy as a whole,” Nikai said.

“If the industries reach a decision (to consolidate), the party can consider whether assisting them would be appropriate,” he said.

Japan has so far spent 234 trillion yen – about 40% of its gross domestic product – in two stimulus packages deployed to ease the economic pain from the pandemic.

The government is tapping a pool of funds, set aside under the packages, to meet the cost of battling the pandemic. But some lawmakers are calling for another spending package as the pain persists.

(Reporting by Leika Kihara; Editing by Richard Pullin)

Copyright 2020 Thomson Reuters.

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By Leika Kihara and Tetsushi Kajimoto

TOKYO (Reuters) – Japanese business sentiment improved in July-September from a 11-year low hit three months ago, a key central bank survey showed, in a sign the economy is gradually emerging from the devastating hit from the coronavirus pandemic.

The data offers some hope for new Prime Minister Yoshihide Suga’s efforts to achieve an economic revival from the crisis and pave the way for hosting next year’s Tokyo Olympic Games.

The headline index for big manufacturers’ sentiment improved to minus 27 in September versus minus 34 in June, which was the lowest level since June 2009, the Bank of Japan’s closely watched “tankan” quarterly survey showed on Thursday.

The result compared with economists’ median estimate of minus 23 in a Reuters poll. While still indicating most companies’ outlook remains downbeat, it was the first sign of improvement in 11 quarters.

“The big manufacturers’ index turned out a little weaker than expected, reflecting an uneven recovery,” said Takeshi Minami, chief economist at Norinchukin Research Institute.

“While automakers’ sentiment rebounded sharply, confidence among capital goods makers is weak. Capital expenditure may weaken in coming months as companies put off non-urgent spending plans amid slumping profits,” he said.

Japan’s factory activity posted its longest streak of declines on record in September, a private sector survey showed on Thursday. The survey showed output, new orders and work backlog contracted again, although at a more modest pace.

The sentiment index for big non-manufacturers also recovered to minus 12 from minus 17 in June, which was the worst reading since December 2009. Analysts polled by Reuters expected the index to hit minus 9.

Manufacturers and non-manufacturers expect business conditions to improve three months ahead, the tankan showed.

The survey also showed big firms plan to raise their capital expenditure by

TOKYO (Reuters) – Japan should keep selling government bonds to the central bank to pay for the cost of reflating the economy out of a pandemic-induced slump, an academic close to new Prime Minister Yoshihide Suga said.

FILE PHOTO: A woman walks past at a shopping district, amid the coronavirus disease (COVID-19) pandemic in Tokyo, Japan August 17, 2020. REUTERS/Kim Kyung-Hoon

There are “no limits” to what monetary policy can do to achieve higher inflation, at least until the Bank of Japan achieves its elusive 2% inflation target, Kaetsu University Professor Yoichi Takahashi told Reuters in an interview.

A former finance ministry bureaucrat, Takahashi keeps close contact with Suga via mobile phone and email.

He met with the premier at a Tokyo hotel days after Suga was elected to succeed Shinzo Abe, who resigned due to poor health.

The two discussed “economy and other issues,” Takahashi said, declining to comment in detail.

“Suga was absolutely right to say he would continue Abenomics,” Takahashi said, referring to Abe’s reflationary recipe comprised of bold monetary easing, flexible fiscal spending and reform.

Takahashi hailed Suga’s intention to proceed with the third arrow of structural reform, which made little headway under Abenomics, and there’s room left for the first two arrows, monetary policy easing and fiscal spending.

Takahashi criticised financial institutions for complaining about dwindling profits caused by the central bank’s negative interest rate policy.

There are many things regional banks can do such as reviewing business models and streamlining operations before they are forced into realignment, he added.

“Who’s complaining about side effects of monetary easing? It’s wrong to make such an argument. The BOJ should keep buying government bonds as there’s no limit to monetary policy.”

The government for its part should not hesitate to boost fiscal spending at a time when