CONTENT PREVIEW
Country Risk

Ruling coalition’s victory in Japanese snap election indicates policy progress, specifically on tax increase and constitutional amendment

27 October 2017

Key Points

  • Prime Minister Shinzō Abe’s ruling coalition not only held onto its majority, but also gained a super-majority in the Lower House of the Diet. A super-majority of votes in both houses is needed to pass a bill on amending the constitution, which Abe aims to do in 2018.
  • The poor performance of the opposition parties highlights ongoing factionalism and weakness relative to Abe’s dominant Liberal Democratic Party (LDP). This points to policy progress on Abe’s favoured policies including a clarification of the Self-Defence Forces (SDF)’ legal status and maintaining nuclear power plants. However, the Constitutional Democratic Party (CDP)’s performance indicates it could provide stern opposition in the referendum needed to alter the SDF’s constitutional position.
  • The Bank of Japan’s aggressive monetary easing will probably continue, and the consumption tax increase is likely to proceed in October 2019. However, the government will nonetheless struggle to reach its target to eliminate the primary balance deficit by fiscal year (FY) 2020.

Event

On 22 October 2017, the Japanese government was re-elected in the second snap general election since Shinzō Abe became prime minister in December 2012.

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