Abe's 'three arrows' miss targets

Big companies have increased their employees' salary as Abe expected. The bonuses salaried workers and public servants received in the third quarter went up by 2.6 percent year-on-year. But adjusted for price changes, they actually dropped by 0.6 percent.

Sluggish domestic demand has put the non-manufacturing sector, including wholesalers and retailers, in an economic fix, and the gap between large companies and SMEs has widened further.

The economic stimulus package, the second arrow, too has failed to deliver the desired results. The Japanese government's budget for fiscal 2013 increased by 5.5 trillion yen ($46 billion) to minimize the negative impact of the consumption tax hike in April. Some 1 trillion yen was allocated from the extra budget for public works projects to boost the economy. But the shortage of workers and sharply rising prices of construction materials have poured cold water on the projects.

In June 2013 Abe shot his third arrow, a long list of policy measures, including steps to promote trade and investment, liberalize the monopoly electricity sector, strengthen agriculture and improve career opportunities for women. It was said to be the best medicine to revive the Japanese economy. "If Abenomics' third arrow works," Barclays Capital's research report said early this year, "its implications for Japan's economic outlook and asset prices are extraordinary." The Japanese government, however, has not come up with concrete measures to push on those fronts.

With his three arrows going off targets, Abe has dissolved the House of Representatives and called snap polls on Dec 14 because, as he said, he wants to see if he can get a fresh mandate on his economic policies.

The ruling Liberal Democratic Party is working out a package of immediate economic measures in its campaign to secure an "absolute stable majority" with its coalition partner Komeito in the all-important lower chamber of parliament.

Yet stopgap measures are not a viable solution. Structural reforms will be the long-term linchpin of Abe's plans and Japan's economic health. As the depressing figures show the government's apparently incorrect projection of Abenomics, voters will now see how Abe passes the test and then revises his policies.

The author is China Daily's Tokyo bureau chief. caihong@chinadaily.com.cn

(China Daily 11/22/2014 page5)