Japan's Lower House on Tuesday passed a new stimulus plan even as experts believe that the country's surprise economic performance in the third quarter will stall in the fourth quarter due to slowing exports and a stronger yen.
Japan's economy grew at the rate of 3.9 percent in the third quarter, according to data released on Monday. However, much of the gain came from the government stimulus plan that boosted consumer spending and saw no contribution from exports during the period.
A stronger yen has added to Japan's export woes, as its products become more expensive to be purchased by foreigners.
But we continue to expect the economy to contract again in the fourth quarter as consumer spending drops back, exports struggle and investment remains sluggish, Capital Economics said in a note.
However, the country's Lower House passed a new $61 billion stimulus plan on Tuesday in an attempt to keep the economy floating.
Japan's House of Representatives approved a 4.4 trillion yen budget package on Tuesday, with the remainder of the stimulus being funded through cost cuts and front-loading of public work projects. The government estimates that it will help lift the nation's GDP by 0.6 percentage points.
The stimulus still needs to be approved by the Upper House, but the bill passed by the more-powerful Lower House becomes law in 30 days even if the former votes against it.