Japan’s Prime Minister defended his economic policy yesterday ahead of parliamentary elections next month amid calls for a change of course in the world’s number three economy.
Half of the 242 seats in Japan’s upper house are up for grabs in the July 10 vote and although Shinzo Abe’s premiership will not be contested, the polls are likely to be seen as a referendum on his policies.
In a debate with opposition parties ahead of the official campaign period kickoff today the leader said ‘Abenomics’ – a mix of massive monetary easing, government spending and red-tape slashing – had shown results.
But Katsuya Okada, head of Japan’s largest opposition Democratic Party, challenged Abe’s assertion, saying: “Economic policy has come to a standstill. Not everybody is enjoying prosperity. We need a change in economic policy.”
Abenomics had a promising start as it sharply weakened the yen, a plus for Japan’s exporters, which set off a stock market rally.
But promised reforms have been slow in coming and there are growing doubts about its prospects for ultimate success.
The International Monetary Fund said on Monday the programme needed to be “reloaded” with steps to increase incomes and achieve labour reforms to meet Abe’s ambitious growth and inflation targets.
In addition to a massive asset buying plan, the Bank of Japan in January adopted a negative interest rate policy aimed at spurring lending to help reach a 2% inflation target, a cornerstone of Abenomics.
Japan’s economy has dodged a recession, growing 0.5% in the first quarter of 2016, but there are concerns about the strength of its recovery.
Abe earlier this month said Japan would delay a planned sales tax hike to avoid damaging the fragile economy. In response, Fitch cut its outlook for Japan’s credit rating, saying it undermined the country’s commitment to paying down one of the world’s biggest national debts.