Abe Reloaded: Now The Hard Work Begins

BMI View: Japanese Prime Minister Shinzo Abe's electoral victory is very positive for political stability, but Abe faces colossal challenges in making Japan's economic recovery sustainable. The key to this lies with structural reform and immigration , but there are significant obstacles to achieving this.

Japanese Prime Minister Shinzo Abe and his Liberal Democratic Party (LDP)-led coalition have won a majority in Japan's House of Councillors (Upper House), taking at least 76 of the 121 seats that were contested in the 242-member chamber ( see 'All In On Abenomics', July 22). Now that he has a majority in both houses of the Diet (parliament), Abe faces a dilemma over how hard to push for economic reform. For many years, he has favoured revising Japan's constitution to ease restrictions on the use of Japan's military, the Self-Defense Forces (SDF). He has also championed patriotic values. In short, he wants to make Japan a great power once again, especially with China on the rise.

However, Abe will also be aware that one of the reasons that his first stint as premier in 2006-2007 came to an abrupt end following the LDP's severe losses in the 2007 Upper House elections was that he focused too much on boosting national defence and patriotism at a time when voters were more concerned about 'bread and butter' issues. Although Japan's security situation has become more challenging since 2007, due to the re-emergence of the Senkaku/Diaoyu islands territorial dispute with China and North Korea's increasingly provocative behaviour, voters have tended to be more concerned about economic issues. Following the LDP's victory, Abe pledged to keep his focus on the economy.

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This article is tagged to:
Sector: Country Risk
Geography: Japan, Japan, Japan, Japan

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