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Japan’s new leader will likely keep big stimulus rolling

Bloomberg
Bloomberg9/2/2020 10:34 AM GMT+08  • 5 min read
Japan’s new leader will likely keep big stimulus rolling
The emergence of Yoshihide Suga as the leading candidate to replace Prime Minister Shinzo Abe suggests Japan will stick to its economic strategy of massive monetary stimulus.
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The emergence of Yoshihide Suga as the leading candidate to replace Prime Minister Shinzo Abe suggests Japan will stick to its economic strategy of massive monetary stimulus, flexibility on fiscal spending and piecemeal reform as the logic of seeking stability in a crisis wins the day.

While Abe’s long-time right-hand man trails rivals including former Defense Minister Shigeru Ishiba in opinion polls, he boasts support from key factions within the ruling Liberal Democratic Party. A move Tuesday to limit the decision-making process to lawmakers likely favors Suga in the leadership contest, which is expected to be held around Sept. 14-15.

Whoever wins will need to make a solid start to reassure investors, business leaders and voters that the nation is in safe hands. After the initial shock of Abe’s decision Friday to resign due to health troubles, markets have stayed relatively calm, indicating they expect Japan’s economic policies to remain largely intact.

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