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25 Oct 2017

International Economy

Eyeing Japanese Economic Policies After Abe’s New Mandate (Current Issue No. 2876 Full Ed.)

According to unofficial results, Japan's Liberal Democratic Party (LDP), led by Prime Minister Shinzo Abe, secured a commanding majority in snap elections, October 22, 2017, so he is expected to resume the premiership for another term. The win was largely due to his national security policies vis-à-vis geopolitical issues in the Korean Peninsula. However, he has yet to announce any new future economic policies as anticipated by local businesses and trade partners.

We at KResearch are of the view that monetary and fiscal policies under the LDP's administration will likely be continued, though the size of some economic programs may not be increased to avoid risks that could undermine the economy later after his first two Abenomics “arrows” (monetary and fiscal policies) failed, so far, to wholly relieve all of Japan's economic distress.

Looking at what will likely drive the Japanese economy ahead, close attention must be paid to the direction of PM Abe's current economic and social restructuring plans, aimed at bolstering labor productivity and resurrecting Japan's status as the world's most innovative country using a “Society 5.0” policy, given the many social constraints that require much time to change. These include a looming “super-aging” society that may cripple their workforce, and an extremely rigid employment structure instituted by Japanese companies. In addition, it is thought that Japan must become more proactive toward bilateral trade negotiations because this will be necessary to preserve their status in international trade.

With regard to our bilateral trade and investments ahead, PM Abe's renewed mandate will likely help to continue the policies of our two countries, in particular, the development of 10 targeted Thai industries and SMEs in alignment with Japan's economic reforms.

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International Economy