Japanese Prime Minister Shinzo Abe’s Liberal Democratic Party (LDP) swept this past weekend’s House of Councillors elections. Although it was unable to secure a two-thirds majority, the LDP won 65 seats of those contested, which, along with the 11 seats gained by its coalition partner the New Komeito, means the ruling party now holds 135 seats in the 242-seat upper house of parliament.
This is good news for Abe. With a majority already in the lower house, the LDP win at the polls eliminates Japan’s “twisted Diet” and provides Abe an opportunity to advance his political agenda. Yet Abe should not expect an easy road, due to the issues he has chosen to tackle and the consequences they may have on his standing in the party.
Consider first the economy, which dominates Abe’s agenda. While Abenomics, the prime minister’s approach of loose monetary policy and fiscal stimulus, has had some success in the form of a rising Nikkei stock index, a weakened yen and increased exports, it is not without controversy. After weeks of relatively stable growth, stock prices have been erratic in recent weeks and at one point plunged. The same is true of the currency market, which has seen the trend of a weakening yen broken by periods of strengthening. Similarly, interest rates have increased despite massive monetary easing. Some experts also worry that the fiscal and monetary easing that lie at the heart of Abenomics will ultimately end in more bad debt.