News Analysis: Abenomics tanking, tax hike flip-flop, public opposition to war moves could lead to snap election

Nationwide polls in Japan taken recently reveal that the public here is growing increasingly aggrieved with Prime Minister Shinzo Abe's promises of economic reform by way of an aggressive three-pronged policy-based paradigm.

Concerns have been rising that the failure of Abenomics and diminishing trust in his administration could lead to a snap election being called by Abe to reestablish his grip on power.

According to a popular nationwide survey gauging the public's overall sentiments towards a number of pertinent domestic news, social and international issues, the vast majority of Japanese people believe that Abe's once hailed economic policy has, indeed, failed.

The online Yahoo! Japan poll, which began on March 3 and concluded with Japanese netizens voting Thursday, showed that 60.9 percent of the people in Japan believe that Abenomics, once though to be a miracle cure for decades of deflationary pressure and stagnant economic growth, believe "it has failed."

This compares to 26.1 percent of the population, the majority of respondents of which hail from the Kanto region yet outside the capital, believing that the prime minister's economic policy paradigm, which includes a mixture of monetary and fiscal policies, as well as rhetoric about much-needed structural reforms to deal with monumental demographic crisis, that is seeing welfare costs swell dramatically, particularly those related to the care of the rapidly aging society, who believe that Abenomics "is being successful."

With leading international economists like Nouriel Roubini, chairman and chief economist of Roubini Global Economics, an independent, global macroeconomic research firm, stating in a press conference in Tokyo recently that Abenomics is "not gaining traction."

While the recent rise of the yen has led to a "tightening of financial conditions" with the nation possibly facing another "debilitating feedback loop," some polled by Yahoo! Japan still remained on the fence about the efficacy of Abe's three-pronged approach to reviving the world's third-largest economy.

Thirteen percent of the population, with the majority of respondents holding executive or managerial positions in their respective jobs, or identifying themselves as being self-employed, and being aged between 40 and 60 years old, stated that they either "didn't know" if Abenomics was a success or a failure or "could not say either way."

Yet for experts on the matter like Roubini, also a professor of economics at New York University's Stern School of Business, and widely credited with predicting the global financial crisis in 2008, two years before it happened, as well as being one of the key economic minds, thereafter, behind resolving both the Asian and global financial crises, the failure thus far of "Abenomics" seems obvious.

Roubini Global Economics has downgraded its growth and inflation outlook for Japan and the economist himself has suggested that the government here and the BOJ need to urgently implement a new blend of policy responses to mitigate this scenario, which include monetary easing to loosen financial conditions, circuit breakers, including credit easing, to restore market confidence and fiscal easing and structural reforms to support current, future and potential growth.

He added that while investments may be solid, consumption, which accounts for 60 percent of Japan's GDP, is weak and wage increases, as evidenced by recent statistics, are not going to be any better than last year, meaning there will be no further increase in households' disposable incomes looking ahead.

Regarding Abe's promise to raise the consumption tax again by 2 percentage points to 10 percent in 2017, he said "it's better to announce a postponement of the tax hike to let consumers know" ahead of time and avoid a "self fulfilling prophecy" that will see consumers tighten their purse strings ahead of increasing costs and falling incomes.

It means that consumption will continue to be pressured from now, through 2017 and beyond, which will ensure inflation stays low and recession ever looming.

Other experts have concurred, with Joseph Stiglitz, also a world-renowned economist, telling Abe this month in person that increasing the nation's consumption tax as planned in April 2017 would drive the world's third-largest economy in the wrong direction.

Speaking after a seminar on global economic and financial issues, Stiglitz said against a backdrop of weaker-than-expected worldwide economic conditions, "A consumption tax increase now is going in the wrong direction."

The 73-year-old recipient of the 2001 Nobel Memorial Prize in Economic Sciences, went on to say the current course of the global economy was unforeseen, and as such Japan's economic policy should be adaptable.

With domestic economic indicators all pointing in the wrong direction, with CPI persistently flat despite the BOJ's reflationary efforts, including the decision to plunge its interest rate into negative territory, with the bank in its latest outlook for the economy, along with the Cabinet Office, both downgrading their views.

The BOJ says consumption and exports remain sluggish and experts like Roubini believe that the economy here is more than likely headed towards a another technical recession.

Yahoo! Japan's latest survey also underscores the fact that the population here is dissatisfied with the government's attempts to kickstart the economy and calls have been made for structural reform policies to be implemented swift and not just talked about,

Local economists also called for the quick deployment of a "fourth (policy) arrow" from the government aimed at increasing real wages, as a pervasive "deflationary mindset" will almost certainly ensure that regardless of if and when the sales tax is hiked again, households will universally limit their spending, which will greatly impact consumption, domestic demand and, hence, production.

Abe has been gathering advice from leading experts like Stiglitz ahead of the Group of Seven summit to be held in Japan in May, as such points regarding Japan's own and the broader global economy, will be central tenets of the meeting, however it is widely believed that if the latest GDP figures come in negative, the Japanese leader may use this as a vehicle to backtrack on earlier promises made about the tax hike and dissolve the lower house of parliament and call a snap election.

Despite Abe's consistent pledges to the contrary, this is a move political analysts have not ruled out, as part of Abe's broader plan to hold a double-election in twine with the upper house election already scheduled for this summer, to achieve a super majority in parliament and attempt to usher in a controversial war-related amendment to Japan's constitution, while reasserting his increasingly unilateral grip on power.

The move would be a further shift away from Japan's long-held defensive security stance and would further allow Japan's military forces to engage in borderless armed conflicts that, since WWII, have been forbidden under the stipulations of Japan's Supreme Law.

In regards to the interrelatedness of the tax hike and U-turn on economic policy related to consumption tax, and the ever-increasing likelihood of a previously denied snap election, the public here remain highly skeptical on a number of fronts, the very public who will be called upon in a national referendum to vote on constitutional change, should Abe's coalition, at the very least, win the upper house elections.

According to a poll by the Asahi Shimbun this month, half of all eligible voters in Japan oppose Abe's push to amend the pacifist Constitution, while 76 percent doubt the effects of Abenomics. Endit