Japanese companies overwhelmingly want Prime Minister Shinzo Abe’s ruling coalition to stay in power in this Sunday’s national election but about two-thirds want it to lose seats, a Reuters poll found.
The survey suggests corporations want political stability but don’t want to hand Abe a landslide victory for fear he might become complacent about reviving the economy.
Many companies in the survey expressed concern that a big election win would encourage Abe to invest his energy in his long-held ambition to revise the pacifist Constitution, at the expense of economic policy.
“We need political stability. But the top priority should be economic steps, not revising the Constitution,” wrote a manager of a construction company, who preferred an outcome in which the ruling bloc of Abe’s Liberal Democratic Party and partner Komeito may lose seats, but keep a simple majority.
Japanese go to the polls on Sunday to elect representatives for the 465-member Lower House.
Forecasts published last week predicted Abe’s coalition would win around 300 seats, close to the two-thirds super-majority it held before he called the election. Along with like-minded parties, the LDP bloc also has a majority in the Upper House, which would be needed to revise the Constitution.
The corporate survey was conducted Sept. 28 to Oct. 12 and found that 94 percent of companies hoped Abe’s coalition would win the election.
However, some 48 percent wanted his bloc to obtain a smaller majority, while 20 percent hoped the ruling camp would retain the 323 seats it held before the Lower House was dissolved last month. Seven percent wanted the ruling bloc to win more seats.
“Those who expect the unexpected like Brexit and (Donald) Trump’s presidency are doomed to disappointment. This election has no single, overriding issue,” said Masaki Kuwahara, senior economist at Nomura Securities, who reviewed the survey results. “Split votes among opposition parties should help Abe’s coalition.”
The campaign has seen the emergence of Tokyo Gov. Yuriko Koike’s new Kibo no To (Party of Hope), which advocates freezing the sales tax hike planned in 2019.
The Reuters survey showed a slim majority wanted Abe to stick to a budget-balancing goal, while opposing his plan to divert revenue from the planned sales tax hike toward education and child care, rather than debt repayment.
“Abe must be playing to the gallery by promising such a plan that may attract voters in the election. How on earth will Japan be able to finance the cost of social security services?” a manager of a metal products machinery maker wrote in the survey.
Asked what policies should be pursued after the election, fiscal consolidation — or efforts to curb the industrial world’s heaviest public-debt burden — was the top choice, picked by 35 percent, followed by additional fiscal stimulus, chosen by 14 percent.
Just 5 percent wanted further monetary stimulus, underscoring the dominant market view that Japan’s easy-money policy has its limits. Only 3 percent said revising the Constitution should be a priority.
“Many companies are wary of a potential collapse of public finances, which would destabilize the financial system and broader economy,” Kuwahara said. “They also fear that revising the pacifist Constitution will send a wrong signal to the Asian neighbors” who suffered from Japan’s wartime aggression.
The survey, conducted for Reuters by Nikkei Research, polled 548 big and midsize firms that replied on condition of anonymity. Around 230 companies answered the questions on the outlook for the election and policies.