Abe’s Defense of Economic Record Glosses Over Japanese Recession

To hear Prime Minister Shinzo Abe’s confident defense of his economic policies in calling snap elections yesterday, you’d never know the world’s third-biggest economy just slipped into a recession.

“The three arrows are beginning to show definitive results,” he said, referring to his policies of monetary easing, fiscal spending and structural reform. He backed his assertion with figures showing rising wages in an improving labor market.

“Abe’s evening speech, announcing a snap election, will give him substantial momentum,” Robert Feldman, head of Japan economic research at Morgan Stanley MUFG Securities Co. in Tokyo, wrote in an e-mailed note yesterday. “He was forceful, passionate, and wholly focused on economics.”

His policies have pushed the yen near a seven-year low, fueling a surge in corporate earnings that led the benchmark Topix stock index to almost double since he came to power. Japan’s unemployment rate is less than 4 percent and the ratio of job openings to applicants is close to a 22-year high. At the same time, a sales-tax increase in April triggered two straight quarterly economic contractions, and real wages have fallen for 15 straight months as the nation creeps out of deflation.

Michael Cucek, an adjunct fellow at the TUJ Institute for Contemporary Asia Studies in Tokyo, gave Abe an ‘A’ for his performance yesterday.

Abe “gave a pretty damn spirited and sound defense of his Cabinet’s economic policies,” Cucek wrote on his Shisaku blog. In response to the argument that Abenomics has failed, “Abe went straight to the nub of the problem and asked his critics, rhetorically, ‘if not what I am doing, what is it that you would do?’”

‘Well Rehearsed’

Not all analysts were as enthusiastic about Abe’s performance.

“He was well-rehearsed at the press conference, which really is his home ground -- no tough questions were asked,” said Koichi Nakano, professor of political science at Sophia University in Tokyo. “If he doesn’t look comfortable there, I don’t know where and when else he would be.”

Even with his approval rating sliding, Abe said yesterday he’d “fight this election openly on a platform including energy, nuclear and security policies,” in reference to plans opposed by the majority of the electorate.

Jeff Kingston, director of Asian Studies at Temple University in Tokyo, said that while Abe did appear confident, he wasn’t convinced the election was really about the tax increase.

“He thinks the news will get worse before it gets better and hopes to get a two-year extension now rather than facing and even more disappointed public,” Kingston said.

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