24 Oct 2017
in Economy, Energy, Government, Macroeconomics, Nuclear Energy, Oil & Gas, Politics
Japan has in the past decade been hit by two major financial crises. The first one was the global financial crisis of 2008 and the second one came about following the Fukushima nuclear power plant disaster. The latter resulted in a nuclear meltdown and forced the Japanese government to immediately cease operations at all other nuclear power plants in the country, which together generated almost a third of all electricity consumed in Japan. As Japan increasingly relied on fossil fuel powered electricity in the aftermath of Fukushima, increased imports of crude oil and LNG caused a sharp hike in the country’s import bill. The subsequent negative trade balance forced the implementation of a number of economic policies together referred to as “abenomics” (named after the Japanese Prime Minister Shinzo Abe).
Whether the country’s economic situation has improved as a consequence of “abenomics” is questionable. Whilst falling crude oil prices have provided some breathing space to the Japanese government and allowed a positive trade balance again, decline in exports and in the Consumer Price Inflation (CPI) in 2016 means that it is too early to regard “abenomics” as a success. Ultimately regarding these policies as the reason for Abe’s recent electoral success is hence a stretch.
Rather the more obvious reason for Shinzo Abe’s victory in the recent Japanese election held in October 2017 can be attributed to the worsening geo-political situation in East Asia, where the rising threat of traditional rivals China as well as the more unpredictable North Korea has resulted in Japanese voters electing a new leader during a time of increased security threats. North Korea only a month prior to the elections fired a ballistic missile over Japan for example. Given that Abe has traditionally been a strong supporter of the Japanese armed forces and has consistently increased their budget, his image as a candidate that can strongly represent Japan on the international stage will have received a boost from voters. This ultimately seems to be the more likely reason for his recent electoral success