Less than a week after chalking up a milestone for the most consecutive days in office, Shinzo Abe is bowing out as prime minister of Japan due to health problems. His eight-year stint began as Japan was reckoning with its place in a new world order: China had become Asia’s main commercial power and the planet’s No. 2 economy. Restoring growth, or at least arresting its slide, became Abe’s primary goal. The prime minister leaves with his signature fiscal and monetary expansion in full swing because of COVID-19. This means his successor will probably keep the substance of these policies in place. With an economic contraction of 27.8% last quarter, there may not be much choice.
The next premier will likely be drawn from the ranks of Abe’s cabinet. Chief Cabinet Secretary Yoshihide Suga, Abe’s right hand man, is a continuity candidate who could be tapped as a caretaker if the party’s factions are unable to coalesce behind anyone with staying power.
Abe’s departure also closes a chapter in his family’s long role at or near the apex of political power in Japan. His great uncle, Eisaku Sato, and grandfather, Nobusuke Kishi, both served as prime minister before him. But even if Japan is ready for a new beginning, it’s important to recognise that the past wasn’t a complete failure. When I lived there from 1999 to 2001, a broad funk had settled in after the bubble economy collapsed a decade earlier. In my multiple visits during Abe’s term, I felt a very different energy.
Abe swept to office promising to shake things up. It was more than a question of pure economics: National security demanded a big shot at reflation. Now amid the upheaval of a pandemic, it’s his legacy that could offer a blueprint for the global recovery. Here are some highlights from my coverage of Japan under Abe:
Abenomics finally finds its moment of genius
With Japan facing its deepest downturn since the 1950s, it would be tempting to conclude that the twilight of Abenomics has arrived. Even before the coronavirus hit, the “three arrows” of the prime minister’s signature economic programme had been losing altitude. Muscular fiscal policy, massive monetary easing and efforts to unshackle business from regulatory burdens were failing to adequately reflate the economy. It’s true that Abenomics has had its setbacks, but to overlook its successes would be a mistake. If anything, the legacy of this programme could outlive Abe’s tenure, offering lessons to future Japanese leaders and global policymakers alike.
Japan is going for broke. Minus the broke part
Tokyo’s stimulus was replete with superlatives suited to the gravity of the coronavirus pandemic. Prime Minister Shinzo Abe unveiled his second package in two months worth about 117 trillion yen ($1 trillion), each instalment dwarfing the response to the Great Recession. Abe said efforts to combat the deepest global dive since the 1930s will amount to about 40% of gross domestic product. This fiscal onslaught won’t prevent a big dip in Japan’s economy; it will probably mitigate it.
Welcome to the table, Mr. Abe. Japan’s been waiting
For a man who swept to office almost eight years ago vowing to restore Japan’s economic vitality, going back to the starting line must have been particularly painful for Shinzo Abe. He enjoyed huge parliamentary majorities and no internal challengers to his command of the ruling Liberal Democratic Party. Yet despite this security, Abe’s response to the COVID-19 pandemic showed anything but leadership in its initial months. He had to be dragged to postpone the Olympic Games — a decision announced only after a number of nations said they wouldn’t send teams. Abe looked more like a prisoner of events than someone at the zenith of his power.
Empty hair salons can’t be saved by a central bank
A pre-COVID trip around the empty hair salons and rusted pachinko parlours of Hokkaido, the northernmost of Japan’s main islands, brought to life the country’s demographic challenges. Places like Naie, a town of roughly 5,000, illustrated the scope of what Japan’s monetary policymakers need to accomplish, and suggest the central bank is ill-equipped to deal with the problems at the heart of the Japanese economy.
Daniel Moss is a Bloomberg Opinion columnist covering Asian economies.