Already a Bloomberg.com user?
Sign in with the same account.
Standard Chartered PLC
Bank of Japan/The
As Shinzo Abe, Japan’s prime minister, prepares to meet with President Obama on Friday, the premier enjoys something rare for a Japanese leader: popularity. The country has endured a revolving door of hapless prime ministers since 2006, with the public quickly souring on each one while the government proved powerless to reverse Japan’s long economic slide.
So far, Abe is bucking the trend. Since taking office in December, following a landslide win for his Liberal Democratic Party, Abe has followed through on promises to weaken the yen and help improve the competitiveness of Japanese exporters. The currency has gone from 82.5 to the dollar at the beginning of December to 93.5 now, and may soon near the 100 threshold. By the end of June, Standard Chartered (STAN) expects the yen to trade at 98 to the dollar. On Jan. 28, Abe’s government raised its growth forecast for the new fiscal year to 2.5 percent, up from an earlier estimate of 1.7 percent.
The yen’s slide is helping to boost confidence in the country’s exporters and provide hope for many Japanese that their long economic malaise may finally be ending. According to a Nikkei poll, Abe was the first prime minister in more than a decade to enjoy an increase in popularity after his first month in office. His approval rating went up six points, to 68 percent, according to the Japanese newspaper.
How long Abe will be able to maintain those numbers depends largely on how well he delivers in the coming months on his promises of economic reform. One of his biggest opportunities comes soon, with Abe due to appoint a new governor of the Bank of Japan (8301). Until now, the central bank has been relatively hawkish on the threat of inflation, even though Japan has been battling deflation for years. A more accommodating Bank of Japan governor should provide a major lift for Abe’s economic plans.
On Wednesday, Abe took to Facebook (FB) (yes, the Japanese prime minister has a Facebook page) to talk about what comes next after addressing the currency and deflation: “Finally we will begin, in earnest, our discussions on the growth strategy—‘the third prong of our economic policy,’” Abe’s office wrote. “Today at the Council on Industrial Competitiveness meeting, we decided upon a policy to compile electric system reforms that will fundamentally reconsider the monopoly held by electric companies until now. In addition, the Council also decided to go beyond the current thinking and approach agriculture as a growth industry and export industry in which young people will wish to involve themselves.”
While Abe has reason to feel confident before his meeting with Obama, some members of Congress have made a point of reminding him of some of the problems he faces with Japan’s neighbors. Representatives Michael Honda (D-Calif.) and Steve Israel (D-N.Y.) yesterday published a letter to Japan’s ambassador in Washington to express their “serious concern” about Abe’s interest in revisiting the 1993 statement by the Japanese government apologizing for the forced sexual servitude during World War II of some 200,000 women from Korea, China, and other countries occupied by the Imperial Japanese Army.
In the letter, Honda, a Japanese-American, referred to his own experience as a child when the U.S. government forced him to live in an internment camp during the war. “Nothing is more important right now than for a democratic country like Japan to apologize for systematic atrocity,” the two congressmen wrote. “This issue is of the utmost importance not only for those directly affected, but also for citizens throughout the world. It is for this reason we are alarmed to hear of any possible retraction of the acknowledgement and apology for the ‘comfort women.’”
Abe will no doubt be looking to Obama for support in Japan’s ongoing dispute with China over islands in the East China Sea. In a sign that the Japanese leader isn’t in a mood to back down, he took an unyielding stance in an interview yesterday with the Washington Post. Abe said that “in the case of China, teaching patriotism [is equivalent to] teaching anti-Japanese sentiment.” That’s a bit rich, as the Post pointed out, since Abe focused on encouraging more patriotic education in Japanese schools during his first stint as prime minister back in 2006-07.