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Difficult road ahead for Abenomics: Nikkei poll

  • 2016-02-29 15:00:00
  • , Nikkei
  • Translation

(Nikkei: February 29, 2016 – p. 2)


 In the Nikkei [and TV Tokyo] public opinion poll, those supporting the “Abenomics” growth policy reached an all-time low. It is thought that the rapid appreciation of the yen and falling stock prices are behind this drop. Many pollees called for economic countermeasures that include additional fiscal spending and for the suspension of the consumption tax hike scheduled for April 2017. As the future of the world economy becomes increasingly uncertain, the Abe administration is faced with difficult decisions regarding the economy as it must also take into account both economic growth and fiscal reconstruction.


 Trying to balance both growth and fiscal considerations


 The Abe administration has been trying to propel Japan out of deflation through “bold monetary easing,” “flexible fiscal spending,” and “growth strategy, including deregulation.” Unfortunately, the economy has yet to emerge from deflation. Business performance –particularly that of large corporations – is at an all-time high with the depreciation of the yen through monetary easing since Abe took office, but regional small, medium-sized, and micro enterprises have yet to see benefits. Excluding the impact of fluctuations in commodity prices, the take-home pay of company employees and others has declined for the past four consecutive years through 2015. Those who do not have a tangible sense of economic recovery are dissatisfied.


 Violent fluctuations in stock prices, concerns about a Chinese economic slowdown, and decreases in crude oil prices since the beginning of the year are casting a shadow on the public’s assessment of Abenomics. Although the Bank of Japan’s “negative interest rate policy” started on Feb. 16, the impact is yet to be seen as the yen continues to appreciate and stock prices continue to fall.


 In the public opinion poll, 53% said that they “disapprove” of the negative interest rate policy while only 23% “approve.” Those who support Abenomics are essentially split on this issue, with 42% approving the negative interest rates and 39% disapproving.


 Pollees who said that Japan “needs to take economic countermeasures that include additional spending” came to 47%, exceeding the 35% who said such measures were “not necessary.” Among supporters of the cabinet, 58% thought such measures were necessary while 40% of those who did not support the cabinet also thought so.


 When asked if they were in favor of raising the consumption tax from 8% to 10% in April 2017, 33% of respondents said “yes,” a drop of 9 percentage point from the December 2015 poll. Those who said “no” came in at 58%, an increase of 11 points.


 Even among the government and ruling parties, some said that the government should create new economic policies prior to the summer Upper House elections and that the income tax hike needed to be postponed. Japan’s fiscal situation is harsh, however, as the nation’s public debt now exceeds one quadrillion yen. If the hike in the consumption tax rate is put off, it is social security that will pay the price.


 Normally, it is critical to improve the infrastructure for growth through such means as easing regulations on labor, agriculture, and medical care, but this cannot be done overnight. Attention will be focused on the policies the government creates as the nation takes measures to achieve a dynamic society with a GDP of 600 trillion yen, a birthrate of 1.8 children per woman, and no situations in which people are forced to leave their jobs to provide nursing care.

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