Research Briefing | Oct 20, 2021

Japan | Kishida chases two elusive ends: growth and redistribution

Kishida chases two elusive ends: growth and redistribution

The pandemic and a fragile political base will provide little room for new PM Fumio Kishida to make drastic changes to economic policy. Our view is that with the backing of the central bank, Kishida’s government will come up with a huge supplementary budget to support the ongoing recovery.

What you will learn:

  • The unease in financial markets – that the new prime minister will reverse Abenomics’ pro-growth and “neoliberalism” policies along with its pro-market reforms – is overblown in our opinion.
  • Kishida has called for a “new type of Japanese capitalism” and argues income redistribution is needed to rebuild the middle class and promote growth. Yet, his advocacy of fiscal discipline appears to be at odds with greater dynamism.
  • We believe Kishida’s equivocal position aimed at both growth and redistribution will prevent him from taking meaningful measures to promote expansion.
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