The new Prime Minister of Japan, Fumio Kishida is all set to lead the country in a different course of action to resolve the economic uncertainty in the country. The new Premier is enthusiastic to introduce economic reforms and leave behind the economic policies of his predecessor Abe Shinzo. The Public of Japan is curious and anxious about the economic policies of Fumio Kishida, dubbed as “Kishidanomics”.
Fumio Kishida became the 100th prime minister of Japan on 4 October 2021, after succeeding Yoshihide Suga. Soon after becoming the Prime Minister, he dissolved the House of Representatives to make way for the general elections which were held on 31 October 2021. In his first policy speech in parliament, Mr. Kishida repeated the word “bunpai” or “distribute” 12 times. In comparison, Mr. Abe used “seicho” or “growth” 11 times and Mr. Suga said “kaikaku” or “reforms” 16 times. A former foreign minister with experience as a banker, Kishida previously said if he were to become the ruling party head, fiscal consolidation would be a major pillar of his policy.
Japan’s longest-serving Prime Minister Shinzo Abe introduced audacious economic policies dubbed as Abenomics with three main distinctions, combined fiscal expansion, monetary easing, and structural reform. Abenomics was designed to fight deflation. Although Abenomics achieved success by handling deflation and bringing more women to the workforce, it failed to introduce structural changes as the wages in Japan remains stagnant. The critics argue that Shinzo’s policies widened the gap between poor and rich. Despite the national and international attention, Abenomics has not benefitted the common people of Japan.
In response to Abenomics, the 100th Prime Minister of Japan, on 8 October 2021, presented his economic policies labelled as “Kishidanomics”. In his speech, Fumio vowed to establish “new Japanese capitalism” to replace the neoliberal policies of the previous administration, which he claimed to have led to growing inequity in Japanese society. The new Prime Minister is set to distribute the firms’ profits more widely among employees, customers, and sub-contractors.
“Japan’s growth hasn’t been strong enough to distribute wealth. They made profits abroad, not at home, so it is very difficult for companies to distribute [this money] when the profits weren’t generated domestically.”
The Covid-19 pandemic has distressed the economic situation of Japan. Since the spread of the pandemic, Fumio Kishida has stressed on providing relief to the people by increasing wages and providing subsidies. The premier has also vowed to introduce a comparatively high budget as a measure against the Covid-19 pandemic. He has also voiced doubts over the Bank of Japan’s prolonged ultra-loose monetary policy, warning in 2018 that the current stimulus cannot last forever.
The critics have pointed out the so-called Kishidanomics is not that different from Abenomics. The Kishida administration will stick to bold monetary easing, flexible fiscal spending, and a growth strategy, all of which had already been facilitated by Abenomics. The current government is also planning to continue the so-called “three arrows” of Abe Shinzo’s administration consisting of bold monetary policy, flexible fiscal policy, and growth strategies.
Prime Minister Fumio Kishida has also shown interest in the continuation of nuclear energy. He deems nuclear as one of the feasible sources of energy while describing its importance in the following words: “suddenly dropping nuclear power is not realistic”. The premier plans to retain and continue Japan’s nuclear energy cycle. His government intends to restart nuclear energy facilities while also promoting renewable sources of energy.
For Japanese people, Abenomics or Kishidanomics is not attractive as long as it does not handle growing discomfort among Japanese workers. Ms. Murakami believes that “Japan’s growth hasn’t been strong enough to distribute wealth. They made profits abroad, not at home, so it is very difficult for companies to distribute [this money] when the profits weren’t generated domestically.”
The new regime in Japan will need to reassure the inhabitants of the country that the progress will continue, and it will do everything to avoid another wave of Covid trauma disturbing the economic cycle in the country. The new premier has to ensure the recovery of Japan’s economy in the post Covid time. Kishida will have to implement his promises of funding small and medium-sized businesses which have been badly hurt during the pandemic. Curbing the growing economic inequality will be a major challenge for Fumio Kishida.