The emphatic victory of Shinzo Abe and his Liberal Democratic Party (LDP) in the December 2014 lower house election masks a quiet power shift toward liberal-centre forces, away from nationalist right-wing forces. What this shift portends is a crucial question for the direction of Abe’s administration.
Japan’s declining population is a serious problem. Unless the nation can devise policy strategies either to arrest the decline or deal effectively with its impacts, in the long run Japan will find its path to sustained economic growth blocked.
The Great East Japan Earthquake, the tsunami and the subsequent nuclear power plant accident in Fukushima on 11 March 2011 changed Japan’s energy future drastically. The revised Strategic Energy Plan, which the Japanese Cabinet approved in April 2014, outlines a new conceptual framework for Japan’s energy policy.
Only one party contesting this week’s Japanese election is advocating agricultural reform and it is not the LDP.
Japan’s Prime Minister Shinzo Abe dissolved the lower house of the Diet on 21 November and called a snap general election on 14 December. At the same time, Abe announced that he would postpone the second hike of the consumption tax rate from 1 October 2015 to 1 April 2017.
Japan is ageing; shrinking population will cause serious problems for the country throughout the 21st century. Although the fertility rate has recovered to 1.39, this is still very low by international standards. Current official projections estimate that Japan’s present population of 120 million will decline to 40 million by 2110. In addition, the proportion of elderly (65 years and older) — now 25 percent of the population — is expected to rise to 40 percent by 2060.
But Japan’s ageing population is not just a challenge. It is also an opportunity.
Investors are growing more fearful after Japan posts a larger than expected GDP contraction and oil falls to a 5-year low.
The S&P 500 fell in early Monday trading after a strong end to last week as investors weighed the impact of a Japanese recession and falling oil. In a note to investors, UBS cited technological change and falling emerging market demand as potential threats to U.S. company growth, while some economists are wondering if consumer demand growth in the U.S. can offset global weakness.
Abe’s persistent stance on the Yasukuni Shrine, the Dokdo/Takeshima territorial dispute and the ‘comfort women’ issue has elicited fierce opposition from the South Korean government. While no rapprochement on any of these conflicts has been achieved, the Japanese government should be aware that its hawkish and revisionist rhetoric is hurting Japan’s reputation and risks driving the country into international isolation.
When Abe dissolved the lower house on 21 November 2014 and called a snap election for December, top leaders in the Liberal Democratic Party (LDP) and New Komeito identified keeping 270 seats as the low-water mark, which would represent a loss of 56 seats. Given current economic conditions and the state of public opinion, a unified and confident opposition would probably extract such losses and would challenge the LDP–New Komeito coalition’s majority. But the opposition is still struggling to unify, so Abe and the coalition look reasonably safe.
Japan’s economy and its lost decades are no more news to us. When Japan was hit by its first real estate collapse, little did it know that its revival would take forever. Many criticized the reforms that were taken and many critics suggested ways to fix the problem of deflation that faced the country. But the 2008 global collapse changed many rules. The US subprime crisis, the Eurozone collapse combined with the much-debated Abenomics gradually dozed off the economy of Japan. Worse, Japan entered its triple-dip recession this year.
