Japan’s economic woes cast shadow on Abe’s twin poll option

Tokyo / Bloomberg

With Japan’s economy shrinking, the stock market in turmoil, and a stronger yen threatening export earnings, Prime Minister Shinzo Abe’scalculus on whether to call a snap general election this summer has suddenly grown more complicated.
Another win in the lower chamber along with an expected victory in the upper house vote set for the summer could allow Abe’s ruling Liberal Democratic Party to stay in power until 2020, making him the longest-serving premier since the 1970s. With ministerial blunders and economic woes eroding his support, Abe risks the opposition Democratic Party of Japan gaining ground in any double vote.
“There are clouds gathering over the plan” for a snap election, said Harumi Arima, an independent political analyst. “If the support rate falls and the point of holding an election is gone, there is a possibility they will drop it.”
Abe has fought and won three straight elections on a vow to revive the economy with his Abenomics plan of loose monetary policy, flexible spending and structural reform. Now with his signature policy in disarray, he may be hard-pressed to reuse his 2014 election pitch of “Economic recovery: this is the only way.” Instead, he may paint himself as an experienced, steady hand in difficult times.
“With growing uncertainty in the global economy, I think they want me to manage the economy responsibly and carry out policy based on a stable political base,” Abe told parliament earlier this month, when asked about his relatively solid support levels.
The prime minister has repeatedly blamed Japan’s recent downturn on global economic factors and on Tuesday he denied that Abenomics had collapsed.
The Japanese public may not be buying that argument after seeing the Topix stock index slide about 17 percent this year. Approval of Abe’s economic policies fell to 39 percent in a poll published by the Yomiuri newspaper Tuesday, the lowest figure since the paper began asking the question in June 2013. Support for Abe’s cabinet fell 4 percentage points to 52 percent in the Yomiuri poll and 2 points to 40 percent in a survey by the Asahi newspaper.
The DPJ, which has been divided over how to respond to Abe and until now unable to mount a serious challenge, has begun to creep up in polls. Sixteen percent of respondents in the Asahi survey said they would vote for the DPJ in the upper house election, up from 14 percent previously. That was still less than half the 37 percent support level for Abe’s LDP.

Tax Increase
Abe last called a snap poll in December 2014, saying he wanted to consult the people about his plan to postpone a scheduled increase in the sales tax to avoid weakening the economy. With sluggish consumer spending the biggest contributor to an economic contraction last quarter and prospects for growth again in doubt, analysts say he could make the case for a second delay to the tax hike now due in 2017.
Toshiro Nikai, chairman of the LDP’s general council told reporters last month that a “double election” was possible, Kyodo News reported. On Feb. 7, Abe aide Hakubun Shimomura told Fuji TV that he saw a 90 percent chance Abe would call a lower house election this year.
LDP lawmaker Kozo Yamamoto said in an interview Wednesday that there were “pretty high” odds of a lower house election this year. “In 2017, there is the sales tax increase in April and a local election in Tokyo in the summer. Taking that into account, it may be better to do it this year,” he said.
Since then, Abe has been hit by a slew of bad news, from the slide in stock prices to the resignation of a young lawmaker over a sex scandal and a row over Environment Minister Tamayo Marukawa’s comments questioning an official target for reducing radiation in Fukushima after the nuclear disaster. All this as a financial scandal that led Akira Amari to resign as economy minister continues to eat into parliamentary debate.

April By-Elections
Abe doesn’t have to make a decision on whether to call the snap poll until weeks before any lower house election. The results of two by-elections in April — one on the northern island of Hokkaido and another in the ancient capital of Kyoto – – will influence his call. Ruling coalition wins in both votes would show the opposition has failed to capitalize on his problems, and Abe may choose to press ahead with a swift general election.
Jun Okumura, visiting scholar at Meiji Institute for Global Affairs in Tokyo, said waiting would be unlikely to benefit Abe.
“The opposition is in disarray, the economy looks to get worse and a rising yen is likely to hit the corporates’ books,” he said by e-mail. “If he doesn’t call it this year, he’s likely to spend the last two years of his fixed tenure in a weaker position.”