Japan to go to the polls next month
Print Edition
JAPAN’S Prime Minister Shinzo Abe has called a snap election for next month and put off a sales tax hike planned for next year, seeking a renewed mandate for his all-or-nothing policies to end two decades of economic stagnation.
Despite those policies, the Japanese economy slipped into a recession last quarter after a sales tax increase in April crushed consumer and business spending. That forced Abe to delay a second hike planned for next October until April 2017.
Abe said yesterday that he will dissolve parliament on Friday.
He wants an election as soon as possible, which would be mid-December, to seek public approval for his tax decision and for his overall “Abenomics” policies of extreme monetary easing, heavy government spending and economic reforms.
The government and the Bank of Japan have pumped hundreds of billions of dollars into the economy in the two years since Abe was elected.
“I realize this election will be tough, but I need to hear the voice of the people. I will step down if we fail to keep our majority because that would mean our Abenomics is rejected,” Abe told a news conference.
The delay in raising the sales tax to 10 percent from the current 8 percent will slow Japan’s work on repairing its tattered public finances. But Abe said the risk to the world’s third-largest economy was a bigger threat.
Fresh elections might seem an odd decision given Abe is only half way through his term and the latest economic news is dismal. But his Liberal Democrats have a solid majority and the opposition parties are in disarray.
Abe described his strategies as the “only path” for Japan to escape its economic malaise.
“Some people say Abenomics has failed or it’s not performing well,” he said.
“But then what should we be doing?” he said.
Abe got a rare second term as prime minister after stepping down just a year into his rocky first term in office in 2006-07.
His support ratings started out high as share prices surged early last year, but they have fallen recently. Parliament got bogged down in squabbles over campaign finance scandals that led to resignations of two of his cabinet ministers within weeks of an early September reshuffle.
By dissolving parliament for an election Abe can clear the slate and once again reshuffle his Cabinet, said Michael Cucek, a Tokyo-based analyst.
Abe pointed to progress in terms of an improved job market and modest increases in wages for some workers.
“We’ve kept moving ahead. We must not stop now,” he said.
Opposition party leaders, already resigned to Abe’s plan, said they couldn’t oppose the delay in the sales tax increase, given the feeble state of the economy.
At more than a quadrillion yen (US$8.6 trillion), Japan’s public debt is the biggest among developed nations and more than twice its economy. But as most of the debt is held by the Bank of Japan and other financial institutions, it is considered stable.
Abe said the tax rise, now slated for 2017, will not be delayed again. Media had reported that he was also planning new stimulus measures, but he offered no new specific plans yesterday.
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