Yoshihide Suga to inherit economic woes, Tokyo Olympics challenge from Shinzo Abe

After the election of Yoshihide Suga as the leader of Japan’s ruling party, it is almost certain that the chief cabinet secretary will take over the reins as the country’s next Prime Minister. This also means that Suga will inherit all the tough challenges faced by Abe and its handling will set the tone for next year’s general elections.

One of the toughest challenges would be the handling of coronavirus pandemic as Abe faced backlash over COVID-19 response during the second wave. While Japan has been witnessing a decline in the daily coronavirus cases for over a month, the number was too high as compared to the early stage of the virus outbreak. Japan has reported over 75,000 confirmed cases of coronavirus cases with more than 1,400 related death so far.

Japan’s economy witnessed a record 7.8 per cent contraction in the first quarter, its worst in the post-war period. Abe was known for his signature economic strategy of "Abenomics", a portmanteau of Abe and economics, but the pandemic has undone whatever the little progress made on that front by the island nation.

Abe advocated economic policies based on “three arrows” of monetary easing, fiscal stimulus, and structural reforms. The monetary easing from the Bank of Japan and increased government spending helped Abe steer the economy out of deflation but coveted growth remained elusive. The subsequent slowdown in later years has raised questions about the effectiveness of his economic strategy. 

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All eyes would be Suga whether he follows Abenomics or choose his own path for economic recovery in the post-pandemic period. Suga is expected to finish the rest of the current term until elections in September 2021 and any dramatic shift in key policy decisions is highly unlikely. However, if Suga opts to follow the economic policies of Abe without any success, it could backfire in the next elections.

Tokyo Olympics

Tokyo Olympics is another major challenge for Suga as Japan is set to host the international sporting event next year, which will just two months before the polls. Holding a large scale sporting event with strict COVID-19 measures could be a big task for Suga if athletes and staff don’t get immunised before the Olympics.

On the foreign policy front, Abe focussed on strengthening ties with traditional allies like the United States, Australia and India, but he also did a balancing act by not letting Japan’s relationship with China sour. Beijing will be looking closely at Suga as China has been cornered in the post-pandemic world over various issues including coronavirus outbreak and human rights violation in Hong Kong and Xinjiang.  

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