Last week’s emphatic electoral win of the Liberal Democratic Party and the return of Shinzo Abe as Japan’s Premier has evoked hopes of a national resurrection. Their advocacy during the month-long campaign of a strong nationalist stance vis-à-vis China and the promise of bringing back the good times of the 1980s and the 1990s paid it rich dividends. The two-thirds majority in Diet, the lower house, which it secured along with a junior ally, should give it the requisite muscle to push through the various recovery measures in the upper house where no party has a clear majority.
Shinzo Abe, who gets sworn in today as the Prime Minister after a gap of over five years, has won a landslide victory primarily on the back of promising a rapid economic recovery. He and his party has talked of ‘unlimited monetary easing’, ‘large scale’ fiscal stimulus and ‘doubling’ the inflation rate. For considerable time now, Japan has been suffering from economic contraction, low grade deflation and a soaring currency which has squeezed its exports. Responding to the signals of the incoming government, the conservative Bank of Japan Governor has already vowed to significantly expand asset-purchases and pump in more money into the economy. Such measures with, no doubt, further pressurise the huge public debt of Japan but the LDP and its leadership consider these essential to lift the GDP growth to 3% per annum, raise inflation target to 2% and bring down the yen by some 20% against the major global currencies.
There is acceptance within the incoming ruling party that an economically-resilient Japan is a requisite for restoring Japan’s international pride. This was their electoral theme and the party leaders took a tough stance, with considerable subsequent electoral advantage, on the dispute with China on the sovereignty of the Senkaku Islands in the East China Sea. Abe had let it be known that the islands unmistakingly belong to Japan and ‘there is no room for negotiations on this point.’ Equally explicitly he had opposed, across the board, shutting down of nuclear power reactors in Japan regardless of their safety status. Post elections,