As Japan dives into recession and a snap election, can PM Shinzo Abe win a new mandate to execute his three-arrow plan?
Japan’s Prime Minister Shinzo Abe has called an early election for December and put off a sales-tax hike planned for next year, as he seeks a renewed mandate for his all-or-nothing policies to end two decades of economic stagnation.
Eighteen months after the stimulus programme known as ‘Abenomics’ was introduced, Japan is in recession.
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The minister had a three-arrow plan to fix the economy: First, the Bank of Japan started buying up government bonds, and by November it spent $723bn a year on that.
Second, Abe increased the sales tax in April. He was trying to pay off Japan’s debt, which is twice the size of the economy, but it backfired – it crushed consumer and business spending and sent the economy into two negative quarters of growth, which is the technical definition of a recession.
And third, he planned business reforms: ending jobs for life and getting more women into work – a step that has not been implemented yet.
Shinzo Abe is Japan’s seventh prime minister in six years, and he was already one of those seven before this term. He still believes in ‘Abenomics’, but has decided to let the people have their say by calling a snap election.
“I want to make it clear through the debates during this general election, whether our economic policies are right or wrong, or if there is no other choice available to us” he said, “I will step down if we fail to keep our majority because that would mean our ‘Abenomics’ is rejected,” the prime minister added.
So what has gone wrong in Japan? Can Shinzo Abe win a new mandate to execute his three-arrow plan? And can his ‘Abenomics’ revive Japan’s economy?
Counting the Cost talks to Seijiro Takeshita, a senior strategist at Mizuho International about the impact of ‘Abenomics’ and the economic future of Japan.
Indonesia’s black gold
Indonesian President Joko Widodo has bumped up the price of heavily subsidised petrol, because with oil prices below $80 a barrel, something needed to be done about the heavy burden.
Jakarta had planned to spend almost $23bn on fuel subsidies, which is just over 13 percent of its budget, but it needs at least $300bn by the year 2020 to meet its infrastructure needs.
So fuel prices have increased by 30 percent and petrol will now cost 70 cents a litre. As with any price rise, inflation will also rise, meaning interest rates will rise as well.
So how will the move affect ordinary Indonesians? What does it mean for much-needed investments? And is the country about to face an energy crisis? Step Vaessen reports from Jakarta.
The new Cold War
We also look at Russia and the effects of the tension between it and the West – effects that are felt from Europe right up to the Arctic.
Ali Velshi from Al Jazeera America has been working on a whole series of reports on a ‘new Cold War,’ and on this episode we analyse why money is such a driver of tension. We take a look at the economic and energy battles right at the top of the world.