Japan’s new prime minister, Yoshihide Suga, could easily be dismissed as a retread of his predecessor Shinzo Abe, but with his focus on the woes of rural Japan and his backroom skills to get things done, he may be a more potent force in pushing through economic reforms. His level of success will decide if Abenomics, the package of measures that Abe put together in early 2013, becomes Suganomics.
When Abe took office in December 2012, he made much fanfare of a three-prong approach to reviving the country’s long-stagnant economy. He was quite successful in prodding the central bank to inject huge amounts of money into the economy in order to break out of a deflationary spiral where lower asset prices and earnings sapped consumption. While the Bank of Japan has failed to reach its much-vaunted target of a 2 percent annual inflation rate, it has managed to keep prices from falling. Abe was also able to push up government spending levels to provide fiscal stimulus, although at the cost of further increasing Japan’s already record-high government debt, still twice as much per GDP as in the United States.
