Business circles expressed hope Monday that the new government to be formed after Sunday’s Lower House election will take prompt action to lead the economy to a recovery.
Business leaders basically welcomed the result of Sunday’s election, in which the ruling coalition managed to cling to a stable majority in the Lower House, but added that the bloc should consider its setback in the polls as criticism by the electorate.
Speaking at a press conference, Takashi Imai, chairman of the Japan Federation of Economic Organizations (Keidanren), said the government should put off fiscal reforms until the economy is growing at an annual rate of more than 2 percent.
The government “should not undertake any fiscal reform until the economic growth rate is confirmed to be above 2 percent,” he said, adding that there may be a need for a supplementary budget this fiscal year to ensure a recovery.
Imai welcomed the fact that the Liberal Democratic Party-led bloc managed to secure a comfortable majority in the chamber, saying Japan needs a strong and stable government at present.
However, he pointed out that the setbacks suffered by the LDP, New Conservative Party and New Komeito represent criticism by urbanites of the coalition’s current policy of catering to rural voters.
“The three-party coalition’s seats fell by 20 percent from its pre-election status. I take that as significant criticism,” Imai said, adding that the setback was conspicuous in urban areas, especially Tokyo.
The coalition should adopt measures for urban voters and present a long-term grand design to voters on such matters as social welfare and structural reforms.
Hiroshi Okuda, chairman of the Japan Federation of Employers’ Associations (Nikkeiren), said in a statement that the coalition’s comfortable majority in the Lower House means voters favored political stability.
Okuda also expressed hope that such stability will lead to speedy action to achieve an economic recovery.
Yotaro Kobayashi, chairman of the Japan Association of Corporate Executives (Keizai Doyukai), said the low voter turnout in the election, the second-lowest level since the end of World War II, is very regrettable.
In a written statement, Kobayashi commented that the low turnout and other election results should be analyzed in policy discussions and election campaigns in the future.
Kosaku Inaba, chairman of the Japan Chamber of Commerce and Industry, said in a statement that, while the three-party coalition narrowly managed to win, the coalition should admit that voters are not satisfied with the current political situation.
At the same time, Inaba noted that the opposition camp failed to clearly offer a viable political alternative to that of the coalition and also failed to obtain a mandate by voters.
Inaba also expressed concern that an increasing number of Diet members in both the coalition and opposition camps are descendants or relatives of powerful politicians.
ReutersIt was business as usual in Japan’s financial markets Monday after the governing coalition was returned to power, although with a reduced majority and facing a stronger opposition.
Stocks ended lower, feeling the pinch from losses on the U.S. Nasdaq market Friday. The yen edged higher against the dollar, however, as market players were somewhat relieved the election ended with no major surprises and with a vote effectively for the status quo.
Prime Minister Yoshiro Mori held onto power with the three-party coalition led by his Liberal Democratic Party winning 271 seats in the 480-member Lower House.
But the bloc’s majority slipped to 56.5 percent from 66.3 percent, and analysts said the weaker mandate could make it tougher for it to pass legislation and cause uncertainty over just how long Mori will stay in office.
Even so, most economists expect no immediate changes in monetary or fiscal policies. They said the outlook for markets remains the same as before Sunday’s poll, with the yen remaining steady until the end of the year and stocks and long-term interest rates edging higher.
The 225-issue Nikkei average ended 37.81 points down, or 0.22 percent, on Monday to close at 16,925.40 after losing as much as 200 points at one point, hit by sliding high-tech stocks in the wake of Friday’s 2.3 percent drop on the Nasdaq.
“The Nasdaq’s fall last Friday had a bigger impact than the election, since the election results were so neutral,” said Hidenori Karaki, equities manager at Tokyo Mitsubishi Personal Securities.
Hopes that post-election euphoria would spur a round of buying faded fast with the market losing ground from the outset.
“There just isn’t any feeling of relief,” said Kunihiro Hatae, general manager of Tokyo Securities’ equities trading division. “U.S. Internet stocks did so badly over the weekend. And as for politics, there is still the question of who the next Cabinet ministers will be, and whether the LDP can implement the right fiscal reforms.”