A global economic view from Japan

An image of an urban area as Andrew Milligan discusses his global economic view.

News & Insights

Andrew Milligan

7th May 2013 at 3:30pm

As I fly back from Tokyo, I have my first sight of the British newspapers. News of the former Prime Minister dominates the headlines.

The history books

I am leaving Japan though where another Prime Minister, Mr Abe, is seeking a place in the history books.

My visit to Tokyo involved speaking at a conference, meeting our joint venture partner Sumitomo Mitsui, and debating with local economists about the state of the world’s third largest economy.

Its problems have been widely discussed – slow growth, falling prices, a declining population, once strong companies now pale shadows of their former selves.

It is different in many respects, of course, from the problems which beset the UK during the 1970s when, for example, the numbers of days lost to strikes was 120 times higher than today!

Political and Business elite in Japan

However, the Japanese political and business elite have clearly recognised the need for change. Abe has a popularity rating of 70% on the back of bold plans to revive the economy, especially by killing the deflation dragon once and for all.

You may have read about the 55% surge in the Japanese stock market in the past six months.

Certainly, many Japanese households are looking with glee at their stockbroker reports and debating whether to take some of their savings and buy some shares – just what the newly appointed Bank of Japan governor wants to see!

Vested interests

Vested interests lie at the heart of Japan’s problems, such as companies run for the benefit of managers and workers but not for shareholders.

In a practical way, this is apparent whenever you walk through Tokyo: the lady standing at the top of an elevator warning you to proceed with care, the five staff who accompanied me to a meeting with a single journalist.

The upper house elections in July are important for Abe: not only should he win, but there will be a three year gap until the next round.

A challenge faces him – will he announce difficult reforms to change Japan?  Restarting nuclear power, reforming employment laws, allowing the use of cheaper generic drugs, these are just a few examples.

We wrote about some of the issues in the February edition of Global Perspectives. I need to return to Japan in the autumn to see if Abe is becoming a reforming politician or not, write an updated blog, and enjoy some more sushi!

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