Japanese Prime Minister Shinzō Abe is preparing to call a snap election amid signs that his economic reforms may be faltering, Bloomberg reports.
A snap vote could provide Abe with the space to force through politically challenging policies, even though the fear of a popular backlash could discourage him from pressing on with these changes.
Speaking at a press conference during the Asia-Pacific Economic Cooperation meeting in Beijing, Abe played coy on the details, but did not rule a dissolution of parliament.
“I have decided nothing about the timing of a dissolution,” he said. “I have heard that there are domestic reports based on speculation. I won’t respond to those.”
Calling a snap election would allow Abe to take advantage of poor poll numbers for the Democratic Party of Japan (DPJ), his party’s main political opposition. The Japan Times reports the latest polls give Abe’s Liberal Democratic Party 36.6% support, while the DPJ are languishing at 7.9%.
These figures are one of the few bright points for the Prime Minister. The Bank of Japan, under the leadership of Governor Haruhiko Kuroda, shocked markets last month by announcing a further huge round of asset purchases at a rate of 80 trillion yen ($US690.5 billion) a year (equivalent of 15% of GDP) as the central bank struggles to hit its 2% inflation target.
The measures have certainly had an affect, with the Yen hitting a 7-year low against the dollar on Tuesday. But there are still doubts over whether the central bank’s efforts will be enough to pull the country out of its decades-long economic stagnation.
All eyes now are on whether Abe will take advantage of the space the central bank is attempting to provide for him to drive through key economic reforms. These include bringing more women into the workforce in order to correct Japan’s woeful gender imbalance and increase its labour supply. Currently women hold only 10% of management positions in the country and only represent 1.2% of corporate boardrooms.
The snap vote is also an indication that the Prime Minister is thinking about delaying an increase of the country’s sales tax from 8% to 10%, planned for October 2015.
Bloomberg reports: “Scrapping the unpopular increase would likely boost his support in an election. The first part of the increase, implemented in April, when the tax was raised to 8 per cent from 5 per cent led the economy to contract 7.1 per cent in the second quarter.”
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