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The uncertain future of Japan

A rising yen accompanied the news yesterday that Prime Minister Shinzo Abe will step down as Prime Minister of Japan for health reasons. The Japanese currency rose against the dollar, closing at 105.47. The passing of the baton will take place two years in advance of the expiry of his mandate. In Tokyo, several names are already vying for the succession. Abe had already had problems in 2007. But this time, given his state of health, the face of Japan, the world’s third largest economy and perhaps the Tokyo Stock Exchange, is about to radically change.

Japan is ready to greet the premier and Abenomics. Shinzo Abe, whose term expires in September 2021, has assured that he will serve Japan until a successor is named. There are several prominent figures in its camp, the Liberal Democratic Party. The most popular to take his place seems to be the current Minister of Finance Taro Aso.

He is not new to this position, even if his political experience is accompanied by some gaffes. But, according to some observers, government secretary general Yoshihide Suga or former defense minister Shigeru Ishiba are more likely to take over. Investors fear that the Bank of Japan’s ultra-accommodative policy, inaugurated and continued with Shinzo Abe’s Abenomics, is numbered.

Shinzo Abe leaves the leadership of the Japanese government at a delicate moment. Shortly before announcing his resignation, he listed the new measures to combat the pandemic, regarding closures and swabs to be carried out. Due to the coronavirus, Abe was also forced to postpone the Olympic Games scheduled for this year to 2021. The Japanese executive is currently an important ruler of the international balance. The world sees Abe as a reliable leader, capable of ensuring stability at the geopolitical and economic levels.

Furthermore, relations between Abe and the United States are excellent and also those with the Russian leader Putin. Local tensions, on the other hand, worry the citizens of the Rising Sun very much. In particular, relations with China and South Korea, which have never digested Abe’s revisionism. Although China represents the first unknown ever, relations with Seoul have become more difficult in the last period. A trade war with Tokyo has arisen in the last year. Japan has hindered Seoul’s export of high technology for the semiconductor industry. That is one of the driving sectors of the South Korean and world economy. From here began the waltz of boycotts, which compromised trade relations between the two countries.

Despite continuing allegations of corruption in his administration, Abe is considered one of the few politicians capable of running the country. He is also one of the few leaders the Japanese know best. In office since 2012, he is also the head of his party, therefore subject to double media exposure. Abe was able to carry out an ambitious economic project after his election. It is known as Abenomics: reviving the Japanese economy after decades of stagnation. It introduced more monetary stimuli, increased public spending and decided structural reforms.

With the aim of boosting consumption and investor confidence. Today Japan, the third largest economy in the world, is severely hit by the epidemic. The first task to which his successor will be called is to counter the strong demographic decline, which in 2019 recorded a new negative record of births: today one in three citizens is over 65 years old.

By Domenico Greco

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