Charting a Course / Concrete measures for growth needed urgently

This is the second installment of a series that explores where the country’s politics go after the recent House of Representatives election.

“We will achieve growth with a Reiwa-era version of policies to double incomes,” Prime Minister Fumio Kishida said at a press conference on Monday. “The fruits of these efforts will be felt by each and every citizen in the form of higher salaries.”

Kishida repeated the word “growth” five times, as well as mentioning the goal of doubling incomes, an expression that was missing from the Liberal Democratic Party’s campaign platform in the recent House of Representatives election.

When Kishida was promoting his centerpiece “new capitalism” policy during the election, he often included the catchphrase “virtuous cycle of growth and [wealth] distribution” in his speeches.

In closely contested constituencies, he used the word “growth” more frequently than the word “distribution,” because it was difficult for the LDP to demonstrate how its campaign pledges were different from those of opposition parties, which all promised large handouts and tax cuts.

In some speeches at the height of the campaign, Kishida did not even mention the word “distribution.”

Among the LDP candidates whose campaigns Kishida supported in their constituencies, more than 80% managed to secure lower house seats, including those who won seats in the proportional representation blocks.

An official close to Kishida said, “The prime minister’s emphasis on growth was in response to calls from people in constituencies to rebuild the economy, which has been battered by the coronavirus pandemic.”

However, few tangible results have been achieved in the nation’s growth strategy, despite it being the “third arrow” of the Abenomics policy package touted by the administration of former Prime Minister Shinzo Abe.

At the press conference, Kishida talked of “bold investment in growth sectors such as science, technology, digital [fields], regional development, and economic security.” However, the government urgently needs to thrash out concrete measures.

Government bonds will likely be issued to fund a major economic stimulus package to be compiled this month. Unless the economy is put back on a growth track quickly, the country’s financial conditions will continue to deteriorate.

The fate of the Kishida administration will also depend on the pandemic situation. The government wants to increase inpatient capacity by 20% compared with this summer.

What Kishida is most worried about is a possible “sixth wave” of infections hitting in winter.

Kishida dissolved the lower house 10 days after his Cabinet was inaugurated on Oct. 4. He wanted to hold the election quickly amid concerns of a possible infection spike following national holidays in late September when more people were out and about.

The Cabinet of former Prime Minister Yoshihide Suga had a high approval rating after its inauguration in September last year. But the approval rating plummeted as the number of coronavirus cases increased.

“It is essential to drastically strengthen the medical system while the infection situation is still calm,” said a high-ranking government official who was involved in the government’s COVID-19 response during the Suga administration. “If [the administration] falls into a negative spiral in which an increase in cases hits support for the government, it will be difficult to break out of it.”