TOKYO, Feb 25 (Reuters) - Japan's main opposition party, looking increasingly set to win an election this year, plans to increase spending in proposals to boost the recession-hit economy, the party's policy chief said on Wednesday.
Polls show the Democratic Party having a good shot at ending almost half a century of rule by the Liberal Democratic Party (LDP) in an election that must be held by October.
The Democrats, who accuse Prime Minister Taro Aso's government of dithering on economic policy, have already promised 57 trillion yen ($587.3 billion) in spending over four years to prop up the economy.
The party's policy chief said it planned to propose more stimulus measures, especially for the fiscal year starting in April, after recent data showed the economy shrank 3.3 percent, or an annual rate of 12.7 percent in the fourth quarter of 2008.
"Research institutions are forecasting the economy to shrink by a double-digit rate again in the January-March quarter, so we need to work with that assumption," Masayuki Naoshima said after a meeting of party lawmakers.
"We need to transform the economy into one that is led by domestic demand, develop new industries and create more work in the farming and fishing sectors," he told reporters.
Details such as how much more spending would be proposed and how it planned to finance the extra spending had yet to be worked out, Naoshima said.
In the short-term, the party would propose measures to deal with unemployment and support corporate financing, but it would also consider longer-term policy proposals such as expanding the market for environmentally friendly businesses.
Aso, whose support has tumbled since taking office last September, is struggling to implement economic policies in the face of opposition parties, which control the upper house of parliament and have stalled bills in a bid to force an early election.
But some political analysts are also sceptical whether the Democrats, an amalgam of former ruling party lawmakers, ex-socialists and younger conservative lawmakers, can do any better with policies given their lack of experience. ($1 = 97.05 Yen) (Reporting by Chisa Fujioka)