Yesterday at 2 PM Aug 28, 2020, it all started from the NHK news channel that Abe Prime Minister will hold a press conference at 5 PM regarding his intention to resign and selecting a new prime minister. His reason was because of his illness and he did not give a name who will be at the conference. Abe prime minister will be still in charge until the next prime minister is selected. He is the longest-serving prime minister of Japan since after the war. Mr. Abe has been prime minister for nearly eight consecutive years and he has been known for many many different things such as Olympic, Abenomics which has “three arrows”: (i) aggressive monetary policy, (ii) fiscal consolidation, and (iii) growth strategy. Recently one was Abenomask :). This is a new hit and it is going to impact worldwide. It is already having an impact in Japan which is that the Nikkei index was down -3.2% after the news at 2 pm and it closed -1.41% Yesterday. I thought it might impact globally including the USA and Europe too when I heard this news. But it looks like there is not that much impact globally! They purposely and strategically announced on Friday at 5 PM because they do not want people to panic and people can calm down during the weekend. Anyway, I want to give respect to Abe San for working so hard for a long time for Japan despite his policy and my belief.
Top 5 Potential Next Japan Prime Minister
Before going to who can be the next successor, I like to mention the major two political parties of Japan, Liberal Democratic Party (自民党) and Democratic Party of Japan (民主党). Abe Prime Minister is from the Liberal Democratic Party (自民党).
Currently, the following 5 people’s names are coming up as the next prime minister successor from Liberal Democratic Party (自民党).
1.Tarō Asō (Deputy Prime Minister of Japan)
2.Yoshihide Suga (Chief Cabinet Secretary)
3.Fumio Kishida
4.Shigeru Ishiba
5.Tarō Kōno
Who is going to be the Next Japanese Prime Minister?
Who is going is to be next from LDP is really going to depends on that they are going to do LDP presidential election(自民党総裁選) or not. From the perspective of the Abe governor team, they might want to choose their next successor without doing it. If it is, Tarō Asō San is a high potential next successor as LDP Prime Minister. For America, he can be a good candidate for them. Yoshihide Suga San has a small potential too. If there is no LDP presidential election(自民党総裁選), the other three members possibilities are nearly zero. If there is an emergency case, it looks like it is possible to switch Prime Minister without LDP presidential election(自民党総裁選). Abe governor team will use current Corona situation as Emergency not to have LDP presidential election(自民党総裁選).
On the other side, there is a big trend that Democratic Parties are going to merge to compete with the Liberal Democratic Party (自民党). There is a high possibility that the election can happen too that both parties can participate. (I will explain to you later why). If it is, there is a high possibility that the election date will be on October 25, 2020. It is good for the Liberal Democratic Party (自民党) before Democratic Parties (民主党) merging happens. If the election happens on Oct 25, Liberal Democratic Party (自民党) does not need to announce regarding Olympic for a while, and then newly elected Prime Minister just needs to announce that “Olympic could not be done. Sorry for that”:).
Why can the Election happen despite Corona?
Nowadays, Japanese people have started to become familiar with how to live with Corona as a new normal. There was a “Go To Travel Campaign” and Corona number has not spiked up as people expected. The main reason is just that each Japanese person is trying to protect themselves individually by following the Corona procedure. I very respect how amazing Individual Japanese people are. If Go to Campaign was ok and cluster affection did not happen like how it should be, there is no reason that Election cannot be done just because of Corona and afraid of Cluster affection. If it is, there is a high possibility that the election will be done on October 25, 2020.
Is there any chance there is a change in Consumer Tax?
If Tarō Asō San became Prime Minister, there is no chance to reduce in Consumer Tax unless the Liberal Democratic Party (自民党) has high possibility to lose to Democratic Party of Japan (民主党). Now there is very less possibility that the Democratic Party of Japan (民主党) can win because the Democratic Party of Japan (民主党) might not be ready before Oct 25, 2020 election day. So there is no way to get reduced in Consumer Tax. As you know Japan has huge debt even before Corona and Olympic. You can imagine how the debt is spiked up because Olympic could not be done and Corona effects. So, there might be a possibility that Consumer tax will increase instead of decrease. It is my personal opinion.
My Conclusion
We do not know yet whether monetary policy is going to change or not for Japan. Abe Prime Minister resigns does not mean that everybody resigns such as the Financial Minister. We do not know anything about it yet. So I am not over worry more than now just because of his resignation in terms of the stock market, currency, and anything for now. No matter who will win the election from Liberal Democratic Party (自民党), there will be no difference, you cannot expect a lot of changes and it will continue like now. It does not mean Japan is OK. Japan is not OK from the beginning because of a huge debt, shrinking population, Financial policy, etc. I believe the major problem is Financial Policy. Because of this, deflation is kept happening, GDP is not growing even-though it looks like there is a growth in the stock market. (I will write more details in Abenomic’s policy blog that will include how it affects Japan’s Economic on the good side and bad side. Stay tuned with me ). For sure, It will be huge burden for the next Prime Minister with the above problems, aggressive China, and unpredictable America. All we can do now is keep watching and wait for more information.
Note: I am not Japanese and I wrote this blog by researching and referencing some Japanese political opinion with my current Japanese level and experiences of living in Japan for more than 8 years. If you have different opinions or feedback, please write in comment. I will appreciate it.
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