5 August 2010 Last updated at 02:47 ET

Japan's PM says economy may need more stimulus spending

Mr Kan said the government was closely watching economic developments

Japan's prime minister has suggested the country's economy may need additional stimulus spending.

Naoto Kan said that while the economy was still growing, there was concern about the level of unemployment and the health of the global economy.

The Japanese economy expanded at an annualised rate of 5% between January and March, but economists say the rate of growth has since slowed.

The government passed a $81bn (£51bn) stimulus package back in December.

"Generally speaking, the economy is picking up steadily, but the jobless rate is at a high level and optimism is not warranted about the situation in other countries," said Mr Kan.

"We will closely watch how the economy is performing to decide whether we need to take some kind of response."

He added that the government may fund further stimulus measures using current budget reserves.

The government has also said it is concerned about the high value of the yen, which makes its exports more expensive when compared with rivals China and South Korea.