Ex-Defense Chief Ishiba Vows to Combat Deflation in LDP Leadership Bid
Former Japanese Defense Minister Shigeru Ishiba, running for LDP leadership, pledges to tackle deflation and boost consumer spending. His campaign focuses on sustainable wage growth and economic recovery.
One year ago, Shigeru Ishiba, a former Japanese Defense Minister, announced his bid for the leadership of the Liberal Democratic Party (LDP), emphasizing the critical need to address Japan's persistent economic challenges. Ishiba's campaign focused on combating deflation and stimulating private consumption, issues that have plagued Japan's economy for over two decades.
At a press conference held on September 12, 2023, Ishiba outlined his policy pledges for the LDP leadership race. He stated, "I don't think private consumption has recovered strongly yet despite some signs of improvement." This observation underscores the ongoing struggle Japan faces in revitalizing its economy, which is the third-largest globally by nominal GDP.
"I promise to achieve sustainable growth in real wages to realise a full exit from deflation, so that people can spend without worrying about the future."
Ishiba's commitment to sustainable wage growth addresses a key issue in Japan's economic landscape. The country has grappled with deflation for over 20 years, prompting the Bank of Japan to introduce negative interest rates in 2016 as a countermeasure. Despite these efforts, Japan continues to face economic headwinds, including an aging population and a shrinking workforce.
The LDP, Japan's dominant political party since 1955, holds significant influence over the country's economic policies. The party's leadership election, typically occurring every three years, is crucial as the LDP's parliamentary control means its leader becomes the prime minister of Japan.
Ishiba's campaign comes in the wake of various economic initiatives, including Abenomics, introduced in 2012 to revive Japan's economy. However, challenges persist, such as Japan's high debt-to-GDP ratio and issues with low productivity growth in the labor market.
The candidate's focus on boosting private consumption aligns with ongoing concerns about Japan's economic health. The country raised its consumption tax to 10% in 2019, a move that has impacted consumer spending. Additionally, the concept of lifetime employment, once a hallmark of Japan's corporate culture, has been declining, contributing to economic uncertainty.
As Japan continues to navigate these complex economic issues, the outcome of the LDP leadership race could significantly influence the country's approach to addressing deflation, stimulating growth, and adapting to demographic changes. The next leader will face the challenge of balancing economic recovery with the need for fiscal sustainability in a nation with one of the world's highest debt-to-GDP ratios.
