Japanese Prime Minister Shinzo Abe was elected two years ago on a promise to resuscitate the world’s third largest economy.
At best, his record has been mixed. Yet he’s gambled his future by calling snap elections for December 14 — asking voters to buy his cure of government spending, money printing and reforms for a second time.
So why is Abe confident enough of victory to risk being thrown out of office two years early? The simple answer: There’s no obvious alternative, politically and economically.
Japan’s opposition is in disarray, and opinion polls indicate his party will win again. That’s despite waning support for his economic strategy — known as Abenomics.
There are good reasons for this. Two years ago, the country was just beginning to emerge from a recession. As the election campaign kicks off Tuesday, the economy has slipped back into reverse.
That’s not to say nothing has changed. Higher government spending, massive monetary easing by the Bank of Japan, and modest progress on some reforms has fueled a stock market boom and reversed a trend of falling prices.
The benchmark Nikkei has risen nearly 65% from the beginning of 2013, and core inflation is near 1%.
At the same time, wages have lagged and many of Abe’s proposed reforms — the keys to sustained growth — failed to launch. On Monday, Moody’s slashed Japan’s credit rating and expressed reservations over the country’s rising debt levels.
via CNN
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Alfonso Esparza
Latest posts by Alfonso Esparza (see all)
- London House Prices Drop 0.2% in March - 05/23/2018
- Bank of Canada (BoC) Expected to Hold Rates Next Week - 05/23/2018
- EU Still Expanding But Growth is Slowing Down - 05/23/2018