‘Suganomics’ from A to Z: policies of Japan’s PM front-runner

‘Suganomics’ from A to Z: policies of Japan’s PM front-runner

Abe’s lieutenant to take more moderate fiscal approach

As Yoshihide Suga, the front-runner to replace Japanese Prime Minister Shinzo Abe, contemplated his candidacy, he met a business leader to discuss what policies to focus on.

“I want to continue Abenomics and enhance it,” he said, putting it at the core of his proposals.

As Abe’s chief cabinet secretary, in charge of overseeing Japan’s powerful bureaucracy, Suga did not have a choice. For the past seven years and eight months, the loyal lieutenant has been seeing Abe at least twice a day.

Massive monetary easing and fiscal stimulus — the pillars of Abenomics — are expected to be central to “Suganomics” if he indeed is elected as leader of the ruling Liberal Democratic Party and becomes the next prime minister.

And it is what his party wants, too. “The next prime minister will have to take over the Abe cabinet as well as his wishes,” said Hiroyuki Hosoda, a leader of the Liberal Democratic Party’s leading faction, which has decided to back Suga.

Perhaps the biggest difference between Abe and Suga lies in fiscal policy. Unlike Abe, who leaned heavily on reflationalist advisers, like Etsuro Honda, to pursue aggressive monetary easing, Suga does not have anyone espousing that monetary theory in his brain trust.

Instead, Suga seeks counsel from such figures as Suntory Holdings President Takeshi Niinami, Future Chairman Yasufumi Kanemaru and David Atkinson, CEO of Konishi Decorative Arts and Crafts. Atkinson helped craft an outline of Suga’s policy promoting inbound spending.

More recently, Atkinson suggested ways to boost productivity, such as lifting the minimum wage and consolidation of small and midsize businesses.

Suga has maintained his distance from advocates of increased public spending, such as former Abe adviser Satoshi Fujii, who called for bolstering infrastructure against natural disasters. Suga is more receptive to fiscal tightening.

Thus, Suga might take a more moderate approach that mixes an aggressive fiscal policy with spending reforms.