(Mainichi: February 16, 2016 – p. 3)
The contraction of Japan’s quarterly gross domestic product growth is sending shock waves through the government and the ruling parties. The government has long enjoyed solid public support thanks to expectations for economic recovery. The economic outlook will likely have an affect on when Prime Minister Shinzo Abe decides to call a snap election.
“If our three-arrow economic stimulus is rejected, we will go back to where we were three years ago and corporate bankruptcies will skyrocket by 30%,” said Abe, reacting sharply to a question from a Democratic Party of Japan member on the impact of the decline in stock prices at the Lower House Budget Committee on Feb. 15. “Compared with (the stock prices) when you were in office, it is plain to see which one the market trusts more, the DPJ or the Abe administration.”
In fact, the current approval rate is higher than when the Abe cabinet was formed for the first time. Some people in the Liberal Democratic Party call the government “a stock price-linked cabinet.”
Abe wants to make constitutional revisions a focal point in the Upper House race. If he secures at least a two-thirds majority, including opposition members, in the Diet, it will become possible to initiate a move to revise the Constitution. He also aims to drive a wedge between the opposition parties. The chances of Diet dissolution within the year stands at “more than 90%,” said Hakubun Shimomura, special advisor to LDP president.
But this scenario is viable only on the condition that the economy is in good shape. The plunge in stock prices since the beginning of the year is dealing a serious blow to the government’s foundation. If the market turbulence continues, the chances of holding a Lower House race on the same day as the Upper House election will become slim. However, there is still a possibility of calling a snap election within the year if the government dissolves the Diet while public support is still high.
Some government officials are beginning to call for putting off increasing the sales tax increase in April 2017 at an early stage due to concerns about the yen’s appreciation and stock market tumble. This means the government would take the same route as the 2014 Lower House race, which sought a public mandate for postponing a tax increase, but there is no doubt that “Abenomics” policies will be called into question. (Abridged)