Japan's new government unveiled a $226.5 billion stimulus package Friday to breathe life into the world's third-largest economy, rebuild disaster-hit areas and beef up the military.

Prime Minister Shinzo Abe, a hawk who came to power last month on a pledge to reverse Japan's fading fortunes and get tough on diplomacy, outlined details of the budget, which includes some local government and private sector spending, at a press briefing in Tokyo.

Abe said the package was designed to stir Japan's lumbering economy and create 600,000 new jobs as well as dragging the country out of chronic deflation that has haunted the world's third-largest economy for years.

Japan's economy shrank by 0.6 percent in 2011. Last year's gross domestic product figures have not yet been released.

"With the measures, we will achieve real GDP growth of two percent and 600,000 jobs created," Abe told the briefing.

"It is crucially important to break out of prolonged deflation and the high yen."

The surging Japanese currency, which hit record highs around 75 against the dollar in late 2011, hammered the country's exporters by making their products less competitive overseas.

But the yen has been tumbling in recent weeks as speculation ramps up that the Bank of Japan will respond to Abe's wishes with more aggressive monetary easing as part of his economic growth plan.

Source: AFP