A Democratic Party of Japan victory Sunday could spur consumer confidence just as the nation climbs out of its worst slump since the war, analysts say.
The DPJ is running on a platform to support households by giving cash to child-rearing families and eliminating highway tolls. Such policies may temporarily bolster sentiment as people anticipate an increase in spending power, according to Masamichi Adachi.
"With a strong DPJ victory, households will expect a boost in income," said Adachi, a senior economist at JPMorgan Chase & Co. "That expectation may increase confidence in the economy."
The DPJ, which has never governed, is projected to win more than 320 of 480 seats in the Lower House, according to an Asahi Shimbun survey published Thursday. Improved sentiment would bolster spending in an economy that last quarter grew for the first time in more than a year.
"The DPJ should be evaluated on how much it can raise consumer confidence," said Takuji Aida, a senior economist at UBS AG. "An improvement in sentiment, supported by a sustained rise in the stock market, will eventually lead to a recovery in production, and thus a recovery in the job market, too."
"Political change is important because there's been such a chronic sense of stagnation," Aida said. "Domestic demand is weak, and society is rapidly aging. If people believe that the government will seriously tackle these issues, there's hope for significant improvement in sentiment."