Japan signaled it will pull together a stimulus program to shore up the world’s third-largest economy after it slumped into a fourth recession since 2008.

Economy Minister Akira Amari told reporters in Tokyo today that there’s a high chance of a package being needed. Etsuro Honda, an adviser to Prime Minister Shinzo Abe, said that a 3 trillion yen ($26 billion) program was appropriate and should go to childcare and other measures to directly help households.

Abe returned to Japan today from attending a Group of 20 summit in Australia where leaders pledged to take steps to boost global growth. Hours before his arrival, a government report showed gross domestic product shrank a second straight quarter in July-to-September as consumers and companies struggled to cope with the lingering hit of a sales-tax rise.

“The present situation is like a boxer who is hit and trying to rise,” said Koichi Hamada, a retired Yale University professor who has advised Abe on economics. “The reason why Abenomics doesn’t look as sound as before is that we added opposite power,” he said, referring to the fiscal tightening.

Abe will meet tomorrow with Kozo Yamamoto, a longtime adviser and head of a group in the ruling party that has estimated there will be as much as 4.6 trillion yen of fiscal scope available for stimulus next year.

The prime minister will hold a press conference tomorrow, an aide said, asking not to be named as the plans aren’t yet public.

Abe is considering postponing the next sales-tax increase, scheduled for October 2015, for 18 months, people familiar with the discussions said last week.

Growth Impact

The Yamamoto led-group estimates that such a delay would add about 0.5 percentage point to real, or price-adjusted, economic growth, according to a discussion paper circulated last week.

A corporate-tax cut and structural reforms will help growth, Hamada said today. The government has for months discussed lowering the corporate levy, and Abe has made deregulation a central part of his reflation campaign.

The Abe administration had determined to avoid a repeat of 1997, when then-Prime Minister Ryutaro Hashimoto implemented a consumption-tax boost only to see it contribute to sending the economy into a recession.

Abe’s administration approved a 5.5 trillion yen extra budget in December to help weather April’s tax boost to 8 percent from 5 percent.

Bank of Japan policy makers also have been implementing an unprecedentedly large asset-purchase program, under a framework Abe appointee Haruhiko Kuroda unveiled in April 2013. Kuroda led a divided board of governors last month in expanding the central bank’s plans for enlarging Japan’s monetary base.

Even so, GDP (JGDPAGDP) shrank 1.6 percent on an annualized basis last quarter from the previous three months, following a 7.3 percent contraction in April-to-June.

Bloomberg