Following the news that Japan’s economy has tipped into recession, Prime Minister Shinzo Abe has dissolved parliament and called for early elections, likely to be held next month.Abe has been pushing—and lent his name to—a grand scheme to restore Japan’s economic vitality after decades of stagnant growth and deflation. “Abenomics,” as it is known, has three “arrows”: massive quantitative easing, two rounds of value-added tax hikes, and deep structural reforms of the highly-regulated economy. In recognition of the current crisis, this week Abe also announced the postponement a second tax hike planned for October of next year, pledging to instate it in April of 2017 instead.The Wall Street Journal notes that though Abe is submitting his economic plan for public re-approval by calling this election and has “promised to resign if his ruling coalition loses its lower-house majority”, experts say he’s unlikely to do so. Whether or not the electorate makes its disapproval clear at the ballot box, this wobbly performance will shake the high hopes many had for Abenomics—and the Japanese weren’t alone in holding them.The revitalization of Japan’s economy would bolster its status as a great power in the Asia-Pacific, a position that the U.S. needs it to maintain. Not only is Tokyo the strongest American ally in the region, but it is also center of the U.S.-backed Pacific coalition designed to keep China’s ambitions in check. If Japan grows weaker, so too does that strategy.
Wobbly AbenomicsAbe Calls Early Elections