- Marcel Thieliant of Capital Economics
With the Japanese economy struggling to recover after the April's sales tax hike but no obvious contenders proposing a more effective fiscal strategy, voters backed up Prime Minister Shinzo Abe's Liberal Democratic Party on Sunday to proceed with reforms known as Abenomics. In Sunday's snap election, the conservative Liberal Democrats, which have ruled for most of the post-World War II era, was reported to gain a solid majority of at least 291 seats. Abe called the snap elections last month even though his approval ratings were faltering due to several scandals and data that confirmed that the Japanese economy had officially fell into recession. The victory provides Abe with four more years to deploy his policies aimed at reviving Japan's economy by injecting liquidity into the market, encouraging corporations to create more jobs and increasing government spending.
In the meantime, activity of Japanese large-scale manufacturers moderated in the final quarter of the year, intensifying the government's headache as it tries to revive the economy, which slid into recession last quarter. The Tankan Manufacturing Index fell to 12 in the fourth quart from 13 in the previous three-month period, where a figure above zero shows improving conditions for manufacturers.
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