It was an irresistible promise: elect me, I’ll bring back Japan’s once-soaring economy and restore its battered national pride.
Three years later, Prime Minister Shinzo Abe is facing the enormity of his grand ambitions, and the clock is ticking.
Abe, 60, swept to power in December 2012 with a novel recipe for success, energising a one-time global powerhouse that languished in a decades-long slump, overshadowed by regional rival China.
The take-charge politician trotted around the globe, inking deals for Japanese firms and selling his eponymous “Abenomics” policy blitz.
“I am back and so is Japan,” the two-time nationalist leader declared to an American audience.
Abe’s call to action—including big government spending and massive central bank monetary easing—had some early successes, as the yen weakened sharply from record highs against the dollar.
The drop was good news for exporters as corporate profits soared and the benchmark Nikkei 225 stock index doubled to the 20,000 level.
A fledgling economic recovery appeared to be taking hold.
But as he marks three years in office on Saturday, the scale of Abe’s self-appointed task may be coming back to haunt him.
Growth has stumbled, the war on years of deflation is not yet won, and a promised overhaul of the highly regulated economy is far from complete.
“Compared to the magnitude of Abenomics’ stimulus, the economy’s performance has been feeble,” said Ryutaro Kono, economist at BNP Paribas.
Abe’s initial burst of enthusiasm—after a forgettable one-year first term that ended in 2007—has not been matched by results, some say.
“The first half of (Abe’s) tenure showed progress,” said Satoshi Osanai, economist at Daiwa Institute of Research. “The second half has not been so bright.”
Abe took power after a rough few years for Japan as it went through a half dozen leaders and saw China overtake it as the world’s number-two economy and assume an increasingly assertive role in Asia.
It also suffered the shock of the March 2011 triple earthquake, tsunami and nuclear disasters, which dealt another blow to the economy.
Facing summer elections, Abe’s popularity is hovering around 50 percent, relatively strong considering the deep unpopularity of some of his policies.
His bid to bolster Japan’s defense posture by diverting from the traditional interpretation of the pacifist constitution—which could see Japanese troops go into battle for the first time since World War II—angered neighbors China and the Koreas and was bitterly opposed at home and sparked rare street protests.
An unpopular push to switch on nuclear reactors shuttered after the 2011 disaster has also done little to boost his appeal.
“Abe’s great advantage is that voters think there is no better alternative,” said Robert Dujarric, director of contemporary Asian studies at Temple University’s Tokyo campus.
A key reason, observers say, is that a weak and fragmented opposition has been unable to mount a serious challenge. As a result, Abe is tipped to tighten his grip on power in next year’s upper house elections.
Meanwhile, Japan’s jobs-for-life culture, a cornerstone of its post-war economic boom, has given way to more part-time and unstable contract work.
The country also has one of the world’s biggest national debts, a problem aggravated by a demographic decline that will see a shrinking labour force made to cover the soaring social security costs of the fast-ageing nation.
The International Monetary Fund has trimmed its growth projections while credit agencies have cut their ratings, amid growing doubts that Abe’s economic plan will work.
Even Abe’s key constituency—Japan Inc—is not playing ball. The premier is struggling to get firms whose bottom line benefited from his policies to share the spoils with employees.
Wage hikes, he says, are key to winning the war on deflation, which held back growth for years as consumers delayed spending in the hopes of getting goods cheaper down the road. That hurt firms’ expansion and hiring plans.
Abe recently pledged to re-focus his efforts on fixing the world’s number-three economy and beef up social programs, as he tries to lure more women and the elderly into a shrinking workforce.
But his legacy hangs on whether he can get tough on overhauling Japan’s rigid labor market and tame the spiraling costs of the national pension system, observers said.
Japan has no time to lose as a brief growth jolt from Tokyo’s hosting of the 2020 Olympics could give way to another long-term economic slide, warned Hideo Kumano, chief economist at Dai-ichi Life Research Institute.
“After the (summer) election, it would be a great opportunity to carry out painful reforms…they need to happen now.”
© 2015 AFP