One of the foremost challenges awaiting the new Prime Minister of Japan, Yoshihide Suga, is how to bring the Japanese economy — facing a crippling recession spurred in part by the COVID-19 pandemic — back on track.
The debate is focused on the extent to which the new leadership in Tokyo can transition from “Abenomics” to “Suganomics” while building a competitive domestic environment. Shinzo Abe, Japan’s longest serving Prime Minister, invested heavily in the country’s economy.
His influence is reflected greatly in Japan’s foreign policy initiatives concentrated on forging greater trade and economic investment partnerships with Japan’s Indo-Pacific partners, especially India. This begs the question: What are the implications that Suganomics will have on the India-Japan partnership, both bilaterally and regionally?
As Abe’s chief Cabinet secretary, Suga was an instrumental force behind the construction and implementation of Abenomics, leading to widespread speculation that his own economic policies — or Suganomics — will likely mirror that of his predecessor. Fiscal policy may be where Abe and Suga differentiate: While Abe pursued aggressive monetary easing, Suga may adopt a more moderate approach with spending reforms and fiscal tightening. Furthermore, there is going to be a general election come 2021 — an election which the ruling Liberal Democratic Party (LDP) risks losing due to massive discontent among the public over Japan’s handling of the pandemic and economic uncertainty. Hence, it is likely that the LDP will want Suga to focus first on short-term prosperity to reclaim public support.