Liberal Democratic Party lawmakers have begun to openly express discontent over Prime Minister Shinzo Abe’s economic growth strategy ahead of July’s Upper House election.
Many LDP members have turned on “Abenomics” since the Nikkei 225 stock average nosedived Wednesday on the market’s underwhelmed reaction after Abe unveiled the “third arrow” of his strategy earlier that day.
The sky-high approval ratings for the Abe Cabinet have been bolstered by the resurgence of the benchmark Nikkei since the government and the Bank of Japan hammered out a set of drastic fiscal and monetary stimulus steps earlier this year. The stock market’s downturn, therefore, has created a sense of crisis among some members of the ruling LDP.
As stock prices plummeted following the announcement of Abe’s structural reforms for the economy and a draft of his government’s fiscal consolidation plan, Hitoshi Kiuchi, a Lower House LDP lawmaker, told a joint meeting with the government Friday that “this shows the market expects little (of Abenomics).”
At the gathering, Kozo Yamamoto, another LDP member of the House of Representatives, demanded the government implement fiscal measures that can fully offset the negative impact of the consumption tax hike scheduled for next April. Raising the levy to 8 percent from the current 5 percent “is the biggest risk for Abenomics,” he stressed.
Many other LDP participants voiced their opposition to the growth measures unveiled by Abe last week, especially a plan to eliminate the current ban on online sales of nonprescription drugs. Scrapping this regulation runs counter to the policy platform presented to voters during the LDP’s victorious campaign for December’s Lower House election, one party member argued.
If the Abe administration keeps sidelining the LDP regarding policy management, in disregard of deteriorating macroeconomic indicators, it will have an adverse impact on the party’s fortunes in the upcoming House of Councilors poll, the party sources said.
“Abenomics could fail” and to prevent this, the government should adopt the ruling party’s proposals, a veteran LDP lawmaker stressed.
Yet the LDP is still expected to give the nod to Abe’s growth strategy and other policy measures as early as Monday to avoid internal strife before the looming election, analysts said.
Still, if stock prices and long-term interest rates continue to fluctuate with their recent volatility, this would shake the LDP even deeper, they added.