The End of the Longest-Reigning 'Shogun Prime Minister' Era in History... The Decline of Abenomics

Average Tenure of Japanese Prime Ministers Before Taking Office: 17 Months Over 20 Years
End of Abenomics, Which Had Been Smuggled Through Long-Term Rule
Japanese Stock Market Also Plunges... Nikkei Index Drops 600 Points at One Point

[Image source=Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] With Prime Minister Shinzo Abe, who set a new record as Japan's longest-serving prime minister, announcing his resignation, it is expected that the economic policy he led throughout his tenure, known as 'Abenomics,' will also come to an end. The Nikkei 225 index in Japan plunged more than 600 points during trading following the news of his resignation, raising concerns about the termination of Abenomics. It is widely believed that without Abe's strong drive during his unprecedented long-term rule of over eight years, during which he was called the 'Shogun of the 21st century,' it will be difficult to maintain the Abenomics system.

According to Japanese local media such as NHK, on the 28th, the Nikkei 225 index closed at 22,882.65, down 326.21 points (1.41%) from the previous session. During the trading session, the index fell more than 600 points following the news of Abe's intention to resign. With the end of the Abe era and concerns spreading in the market that Abenomics, supported by strong fiscal expansion policies, will be significantly shaken, the Japanese stock market is expected to show instability for some time.

Abenomics, characterized by bold monetary policy and agile fiscal policy as its core growth strategy, has been a key driver of the Japanese economy during Abe's tenure. Abenomics was credited with revitalizing the Japanese economy and at one point helped boost Abe's approval rating to as high as 76%.

Starting in December 2012 with Abe's second term, Abenomics was regarded as the force behind Japan's longest postwar economic boom until the impact of the novel coronavirus disease (COVID-19) appeared. Japan's effective job openings-to-applicants ratio rose from 0.8 in 2012 to 1.61 in 2018, leading to improved corporate earnings and rising stock indices.

[Image source=EPA Yonhap News]

The dominant view is that the power behind these results came from Abe's authority as the longest-serving prime minister. Abe's total tenure, combining his first and second terms, exceeds eight and a half years. His first term lasted 366 days from September 26, 2006, to September 26, 2007, and his second term has lasted 2,804 days from December 26, 2012, to the present. On the 24th, Abe surpassed the previous record for the longest consecutive days in office among Japanese prime ministers, reaching 2,799 days.

With the strong authority that earned him the nickname 'Shogun of the 21st century,' Abe was able to lead Abenomics for a long time through his solo run in politics. Before Abe's administration, the average tenure of Japanese prime ministers over the previous 20 years was only 17 months. Frequent changes in government meant that no matter how good a policy was, there was a lack of momentum to push it consistently in one direction, leaving the Japanese economy struggling to recover since the collapse of the bubble economy in the 1990s.

However, this year, the Abe administration's inadequate response to COVID-19 and the resulting economic ripple effects have pushed the Japanese economy back into what is called the 'Lost 20 Years' period before Abenomics. On the 17th, Japan's Cabinet Office announced that Japan's real GDP in the second quarter of this year decreased by 7.8% compared to the previous quarter, which translates to an annualized rate of -27.8%. This was the worst performance ever, far exceeding the annualized -17.8% recorded in the first quarter of 2009 during the financial crisis.

Japan's economy recorded three consecutive quarters of negative growth for the first time since the Great East Japan Earthquake in 2011. Foreign media such as CNBC pointed out that Japan's real GDP contracted to 485 trillion yen (approximately 5,399 trillion won), returning to the level of the second quarter of 2011. The achievements of Abenomics, which began in 2012, have been completely wiped out by COVID-19.

With the resignation of the long-dominant heavyweight prime minister, Japan's political scene is expected to experience turmoil for some time over the selection of his successor. The burden of handling pressing issues such as responding to the COVID-19 crisis and restoring the collapsed economy is expected to fall on the shoulders of the new prime minister.

This content was produced with the assistance of AI translation services.