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Can Japan do better than muddle through?

18 6 8

SHINZO ABE is into his sixth year as Japan’s prime minister and is poised to become the longest serving in Japan’s history if he serves out his term to 2021. His leadership has brought a stability to Japanese politics that was absent prior to 2012 with a revolving door of political leaders, including a disastrous one-year term for Abe from 2006.

His economic leadership, at least in rhetoric, has been the difference this time around.

The Abenomics reform package on which Prime Minister Abe campaigned was the right one to lift Japan out of two decades of anemic growth. But he hasn’t really committed the political capital needed to take on the vested interests for the reforms that matter most. He continues to do just enough on the economic front to keep the Japanese economy on a stable course but his main political aim is the normalisation of Japan’s military.

SEE ALSO: How Japan plans to make life easier for foreign workers

The mandate that Abe gave Bank of Japan Governor Haruhiko Kuroda checked Japan’s deflation but it hasn’t lifted prices to the target 2 percent a year. Much of recorded economic growth has come from crude Keynesianism — fiscal and monetary expansion — instead of structural reforms to lift Japan’s growth potential.

Two big structural challenges still loom over the Japanese economy. The first is the ageing and shrinking population and the other is the unprecedented gross government........

© Asian Correspondent