Japanese Prime Minister Shinzo Abe unveiled $120 billion in stimulus measures on Thursday, to help the world's third largest economy overcome the aftermath of recent natural disasters.

The package is also aimed at helping alleviate the impact of a recent tax hike and survive a potential economic slowdown after a spending boom for the 2020 Tokyo Olympics.

"We will introduce a daring fiscal policy worth 13 trillion yen ($120 billion)," Abe told ministers and party leaders at the prime minister's office.

"We have crafted a powerful policy package," Abe added.

Under the plan, the government will spend some six trillion yen on public investment after a series of natural disasters -- including killer Typhoon Hagibis -- caused huge damage to infrastructure, local media said.

Japan's economy has so far expanded this year, partially because of strong demand related to preparations for the Olympics, which will start in July. Some analysts warned the country may suffer a post-Olympic slump.

The new financial package aims to stimulate the economy and get through a potential post-Olympic slump
The new financial package aims to stimulate the economy and get through a potential post-Olympic slump AFP / CHARLY TRIBALLEAU

The package is also aimed at easing the impact of the increase in consumption tax from eight percent to 10 percent, which came into effect on October 1, and helping Japanese firms prepare for a global economic slowdown due to the US-China trade dispute.

The Tokyo market welcomed the package, with the Nikkei index up 0.71 percent and the broader Topix climbing 0.48 percent.

"In particular, stimulus-related shares such as construction companies benefited from the announcement," Toshikazu Horiuchi, a broker at IwaiCosmo Securities, told AFP.

But Yusuke Shimoda, economist at Japan Research Institute, warned the impact of the package could be "limited."

"The package is likely to boost infrastructure-related businesses, but is unlikely to help reform the nation's slow-growth economy fundamentally," Shimoda said.

The package will also include government measures to help expand exports of farm products as a trade accord between Tokyo and Washington is set to take effect next year, Kyodo News said.

Among other steps, the government will help people in their 30s and 40s, who have been struggling to find work due to past economic slowdowns, to land new jobs, it said.

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