Economic data, opinion polls back new PM Abe

TOKYO - Reuters

Japan’s new Prime Minister Shinzo Abe smiles with lawmaker and Secretary General Shigeru Ishiba of his ruling Liberal Democratic Party at a parliamentary meeting.

Poor Japanese manufacturing data no Dec. 28 gave new Prime Minister Shinzo Abe more ammunition to push for big spending and easy money to salvage the world’s third largest economy from decades of deflation and its fourth recession since 2000.

Japanese voters and the financial markets have welcomed the Abe government’s aggressive stance on pumping cash into the economy, pushing the benchmark Nikkei share average on Dec. 28 to its highest level since the March 2011 tsunami, despite the worse than expected drop in factory output.

Opinion polls published by major newspapers showed half to two-thirds of the public supported Abe’s conservative government, with the stagnant economy the top priority.

Delicate period

Top officials of the new government, sworn in just two days ago after a landslide election victory, say Abe’s administration is under pressure to achieve quick results.

“[Public support] will drop if speculation mounts that we are unable to deliver,” Akira Amari, the minister in charge of reviving the economy, told a news conference after a Dec. 28 cabinet meeting.

But many economists warn Abe’s emphasis on stimulus, rather than underlying structural reforms to boost competitiveness, may have only short-term effects and could worsen bloated public debt, the worst among the industrial nations.

The government is keeping up pressure on the Bank of Japan (BOJ) to step up its monetary stimulus, even after it loosened policy in December for the third time in four months.

Finance Minister Taro Aso said he was paid a courtesy visit by BOJ Governor Masaaki Shirakawa on Dec. 28 in which the two agreed to hold talks on issues including coordinating policy.

Abe has threatened to change the law which guarantees the central bank’s independence if it does not pursue more aggressive easing.

Potentially adding more pressure on the BOJ was Japanese factory output data that fell a steeper than expected 1.7 percent in November, more than tripling the drop forecast.