It was reportedly predicted by the International Monetary Fund (IMF) that Japan’s economy, along with other first-world countries, would enjoy an increase by 2015. However, recent news has it that the country’s economy has suddenly taken a plunge by third quarter of this year. This devastating slump has led people to question Prime Minister Shinzo Abe’s efforts.
For two decades, Japan has been struggling with deflation, but PM’s ‘Abenomics’ policies were supposed to pull the country’s economy. With the prime minister calling for a snap election, it suggests that his plans did not work. Now, Mr. Abe is considering dissolving the parliament form of government. People close to the country’s leader say that the economic report last Monday is critical to his decision.
Mr. Abe said in a speech at an event organized by the Komeito party, “Unfortunately, the numbers were not good.” He added, “Now that we’ve finally grasped the chance to escape from our long deflation, we cannot let it get away.”
One of the reasons expert say that triggered the economic downturn is the decrease in consumer spending due to the rising sales taxes. Preliminary economic reports show that GDP dove at an annualized pace of 1.6 percent in the third quarter of the year through September. When you add that to the previous quarter’s economic report, Japan’s economy suffered a total of 7.3 percent decline in gross domestic product, which is worse than its last estimate of 7.1 percent.
The sudden recession underscores the problems that the Prime Minister has faced since he was elected. Mr. Abe vowed to revive Japan’s economy with a focus on stimulus measures, particularly expanding asset purchases by the Central Bank. However, economists say that the impact of the PM’s policies has been dulled due to the tax increase that the previous administration has approved.
Oppositions, however, believe that dissolving the lower house to modify the tax plan is not necessary. Some even suggest that such an issue is a convenient excuse for the Prime Minister to seek a fresh term while he is still in power. Nevertheless, PM Abe remains relatively popular due to public support of around 50 percent.