Japanese prime minister Shinzo Abe has said the revolving door of politics is over and promised greater certainty on economic reform, following his parliamentary upper house election win last week.
Speaking at the 33rd Singapore lecture on economics and relations with southeast Asia, Abe said he would focus on the “third arrow” of reform in particular from now on. He added that fiscal reconstruction would not be possible without growth.
The three arrows of Abenomics refers to a number of measures intended to pull the country out of its slump. The first arrow began on 4 April when the Bank of Japan’s new governor Haruhiko Kuroda said he would end deflation by injecting large amounts of cash into the economy in order to reach a two per cent inflation target. The second arrow came in the form of a massive fiscal stimulus worth 10.3 trillion yen (£70bn), investing in public works and infrastructure renovation, and giving tax incentives to companies investing in research and development, hiring more employees, paying higher salaries, and so on.
The third, and most eagerly anticipated, is the least concrete of the three, and is intended to boost long-term performance. However, its lack of decisiveness has so far come as something of a disappointment to the Japanese people and prompted claims that Abenomics was failing. In particular, little has been done to address weakness in the labour market, health care and business deregulation.
With his newfound political stability, however, this could be a turning point for the Japanese leader and an opportunity to crack down decisively on these issues.