PM Abe focussed on fast-growing economies in Southeast Asia.
TOKYO (AFP) - A year after a landslide
national election, Japanese
Prime Minister
Shinzo Abe is riding high as his plan to rescue the economy earns
praise at home and abroad, but chinks in his armour are beginning to
show.
The unprecedented policy blitz, dubbed Abenomics, ushered in growth
that led G7 nations in the first half of the year, stoked a sizzling
stock market rally and offered a tantalising end to years of deflation.
When Abe formed his cabinet on December 26 he had the backing of a
large proportion of the population to follow through with a pledge to
reverse two decades of lacklustre growth and debilitating deflation.
Then at the beginning of 2013 he declared that "Japan is back" in a speech to the New
York Stock Exchange, saying his prescription of big government spending and monetary easing would reinvigorate the world s number-three economy.
He embarked on a roadshow abroad to
sell Brand Japan, including signing a nuclear reactor deal in Turkey and focussing on fast-growing economies in Southeast Asia.
"This has been a very hectic year, travelling a lot overseas," Abe
said in speech last week, adding he visited over two dozen countries
since election night.
His globetrotting burnished an image of a strong leader committed to
getting things done in a country where the pace of policy is often glacial.
And Tokyo s winning bid to host the 2020 Olympics gave national pride another shot in the arm, as well as promises of further
economic benefits.
"Abenomics definitely deserves praise," said Ivan Tselichtchev,
economics professor at Niigata University of Management. "It has greatly
improved sentiment among investors and consumers which is a positive
for economy."
Applause for the two-time premier is a far cry from 2006 when his
term ended in ignominy and illness after just a year in office.
This time around, Abe s efforts are bearing fruit. His policies and
those of his new central bank governor Haruhiko Kuroda helped sharply
weaken the yen -- the unit has lost a fifth of its value against the
dollar this year, giving a boost to exporters -- while the stock market
has surged more than 50 percent to a six-year high.
Economic growth slowed in the
third quarter,
but business confidence remains at a six-year high, while a key
inflation indicator in October rose at the fastest pace since the late
Nineties.
But observers say firms must now raise wages so employees have more
to spend, driving the economy and giving the corporate sector confidence
to expand.
An increase in pay packets is even more crucial ahead of a sales tax
rise next year to 8.0 percent from 5.0 percent, a move aimed at
shrinking Japan s huge national debt, proportionately the worst among
wealthy nations.
The International Monetary Fund, among others, has welcomed Tokyo s
efforts to get its fiscal house in order, but the tax rise has stoked
fears it will derail a recovery. The last sales tax rise, in 1997,
foreshadowed the fall into deflation.
I m worried about our future
==============================
cAnd while the economy is moving to move in the right direction, there is a growing disillusionment with the leadership.
An unpopular state secrets bill, raw tensions with China and South
Korea, and growing doubts about Tokyo s print-and-spend economic
policies are beginning to test Abe s popularity.
"My husband s salary has not changed in the past eight years and now
rising prices are affecting the family s budget," said 42-year-old Tokyo
resident Yasuyo Sakata.
"Abenomics is for other people. I haven t felt any positive impact from it, and I m worried about our future."
Criticism like Sakata s is a worry for Abe, whose place in the
history books rests on him convincing ordinary people that his
much-lauded policies will help them, rather than just lift company
profits and share prices.
For detractors such as Noriko Hama, economics professor at Doshisha
University in Kyoto, Abenomics is "a bunch of all the wrong ideas for
all the wrong reasons", a money-printing exercise that will saddle Japan
with more debt.
Critics and advocates alike have warned that promised economic
reforms -- including more flexible labour markets and free trade deals
-- are essential for the growth plan to work.
"Progress on structural reforms has been disappointing," Capital Economics said.
While Abe s first year largely focused on the economy, he wobbled on
the diplomatic front, and ties with China and South Korea, soured over
separate territorial disputes, remain poor. The spectre of an
unpredictable North Korea also lurks in the background.
His donations to a controversial war shrine and pledges to spend
billions of dollars building up the armed forces has unnerved neighbours
wary of Japan s imperialist aggression in the 20th century.
The military is limited to self-defence under Japan s pacifist constitution -- a restriction Abe would like to change.
His government continues to face opposition over plans to re-start
nuclear reactors shut down after the 2011 Fukushima crisis, and a broad
state secrets law lambasted by critics as "the largest threat to
democracy in post-war Japan".
Abe s first year has gone "smoother than we thought," said Shinichi Nishikawa, politics professor at Tokyo s Meiji University.
"But the real tests are still ahead -- next year will be crucial for Abe, and for Japan."
