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Abe’s Party Set for Win  Despite Economic Challenge
International

Abe’s Party Set for Win Despite Economic Challenge

Japan's Shinzo Abe will put his prime ministership to the test on Sunday, in a snap parliamentary election that will give him four more years to try to put the economy right and pursue his goal of making Japan a "beautiful" country again.
Abe's decision last month to dissolve the House of Representatives and call the election two years early was viewed at first as something of a rash move, with analysts saying his ruling Liberal Democratic Party (LDP) could lose dozens of seats.
But an almost non-existent opposition and a slow realisation that "Abenomics" remains the best option for reviving the moribund economy means the LDP could return with an even bigger majority.
The latest opinion polls show that the conservative LDP and its partner, Komeito, are poised for a landslide victory. Some newspapers, including the left-leaning Asahi Shimbun, are even predicting that the LDP could increase its showing in the 475-seat lower house from 294 to as many as 317 seats, giving it the two-thirds supermajority it needs to govern alone. However, turnout is expected to be low.
Abe called the election essentially as a referendum on his economic policies, after official statistics showed Japan had tipped back into recession despite his efforts to stimulate growth with much easier monetary policy and a huge injection of government spending. Trickier structural reforms are still coming.
Abe also postponed an unpopular proposed increase in the consumption tax, by two percentage points to 10 per cent. The three-point increase in April, the first in 17 years, has been blamed for the sudden slowdown in growth.
People who said the return to recession showed that Abenomics had been a failure were mistaken, Etsuro Honda, an outside economic adviser to Abe, said. He has been a leading proponent of Abe's pro-growth policies and had argued against the second tax increase.
"Previous governments were not brave enough to conduct bold and aggressive policies," Honda, an economics professor at Shizuoka University, said.  He has popularized the English catchphrase "Tina" - "There is no alternative" - in the prime minister's office, which is reflected in the LDP's campaign slogan: "This road is the only road."
The effects of Abenomics would be felt gradually, he said. A huge cash injection from the Bank of Japan at the end of October would take six to eight months to filter through to the real economy, while the structural reforms could take 10 years to work.
"But there is no other way to get out of deflation. The fundamental problem is with people's mindset," Honda said.
After 15 years in a deflationary spiral, Japanese people are not used to prices going up. That means they suffered from "sticker shock" as the first consumption tax increase took effect. Compounding that shock, real wages have been falling, making things seem even more expensive.

 

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