A veteran politician and long-time cabinet member, Yoshihide Suga takes the lead at a difficult time for the world’s third-largest economy.
Like many other nations, Japan is struggling with the coronavirus pandemic which has caused the biggest economic slump on record following years of economic stagnations.
Japan is also dealing with a rapidly ageing society, with nearly a third of the population older than 65.
Yoshihide Suga, 71, has served for years as chief cabinet secretary, the most senior role in government after the prime minister.
He has already promised to carry on much of the previous administration’s agenda, including the economic reform program dubbed Abenomics.
Born the son of strawberry farmers, Yoshihide Suga comes from a humble background that sets him apart from much of Japan’s political elite.
He only slowly within the political ranks. He first worked as a secretary for an LDP lawmaker before eventually embarking on his own political career, from city council elections to becoming a member of the Diet in 1996.
In 2005 he became a cabinet minister under Junichiro Koizumi and gained further influence in the subsequent Abe cabinet.
As Shinzo Abe’s right-hand man, Yoshihide Suga gained a reputation for being efficient and practical and the outgoing prime minister strongly supported his ally’s bid for the leadership.
Japan’s Prime Minister Shinzo Abe has decided to resign for health reasons.
Shinzo Abe, 65, said he did not want his illness to get in the way of decision making, and apologized to the Japanese people for failing to complete his term in office.
He has suffered for many years from ulcerative colitis, an inflammatory bowel disease, but he said his condition had worsened recently.
In 2019, Shinzo Abe became Japan’s longest serving prime minister. His current period in office began in 2012.
Shinzo Abe will remain in his post until a successor is chosen.
In 2007, he resigned abruptly from an earlier term as prime minister because of his struggles with ulcerative colitis, a chronic condition that he has lived with since he was a teenager.
Shinzo Abe has a reputation as a staunch conservative and nationalist, and for stimulating growth with his aggressive economic policy known as “Abenomics”.
The prime minister has strengthened Japan’s defenses and boosted military spending, but has been unable to revise the constitution’s pacifist Article 9, which bans a standing army for anything other than self-defense.
Shinzo Abe said his health started to decline as his ulcerative colitis made a resurgence around the middle of July.
He was now receiving a new treatment for the condition which had to be administered on a regular basis and would not give him enough time to carry out his prime ministerial functions, he added.
Shinzo Abe said he could not make any mistakes in terms of important decision making, and therefore had decided to step down.
He said: “I made a judgement I should not continue my job as a prime minister.
“I would like to sincerely apologize to the people of Japan for leaving my post with one year left in my term of office, and amid the coronavirus woes, while various policies are still in the process of being implemented.”
Shinzo Abe also expressed regret at not fulfilling his core pledges – forcing North Korea to return Japanese citizens abducted decades ago; sorting out a territorial dispute with Russia; and overhauling the constitution to give more power to the military.
Japan stock market traded low as the yen surged after the Bank of Japan decided against any extra monetary easing.
The Bank of Japan (BoJ) kept interest rates unchanged despite coming under pressure to take further action.
The central bank had introduced negative rates in January but this failed to provide a much needed boost for the economy.
The Nikkei 225 index finished 3.6% lower at 16,666.05. New economic data also showed a slip back into deflation while industrial production expanded.
Japan has for years been trying to boost its economy and end a period of stifling deflation.
One way to try to achieve this is by monetary policy, which is one of PM Shinzo Abe’s three key “Abenomics” policies to turn around the economy.
However, even negative rates – meaning commercial banks will be charged if they deposit money with the central bank – have not trickled down to get banks to lend more and companies and people to invest or spend more.
Inflation is still far off the 2% target.
The BoJ’s decision to hold rates also sent the yen currency soaring, which is likely to have a negative effect on the crucial export sector.
The yen rose nearly 2% against the dollar, with one dollar worth 109.33 yen.
The Japanese economy contracted by 0.4% in Q4 of 2015 compared with the previous quarter, official figures show.
Expectations for the numbers were for a quarterly contraction of 0.3%.
Weaker domestic demand, together with slower investment in housing, contributed to the disappointing numbers.
On an annualized basis, Japan’s economy contracted 1.4% during the period. That compares with expectations for an annualized contraction of 1.2%.
The annualized figure is the rate at which the economy would have contracted over a full 12 months had the December quarter been a reflection of the entire year.
PM Shinzo Abe’s plan to revive the economy – dubbed Abenomics – was introduced after his December 2013 election win.
Its aim was to combat deflation, which Japan has struggled with for nearly two decades, as well as boost demand and investment. It also wanted to weaken the yen, so helping big exporters like Toyota become more competitive.
However, growth has remained a concern. Analysts say Japan needs to ensure exports grow in order to support future economic growth – for every 1% that Japan’s economy grows, between 0.5 and 0.7% comes from exports.
Japan also relies heavily on domestic consumption but its population is ageing and shrinking so fewer people are contributing to the economy.
In Q3 of 2015, according to revised numbers, Japan avoided a technical recession. It has already been in recession four times since the global financial crisis.
Some analysts said February 15 numbers should be viewed in context.
“A single negative growth number should not be over-interpreted because the economy remains in rather good shape and continues to get strong policy support,” said economist Martin Schulz.
Investors seemed to shrug off February 15 growth numbers, with the benchmark Nikkei 225 jumping more than 4% shortly after the figures were released.
However, the benchmark shed more than 11% last week, which was a short trading week due to a public holiday on February 11.
Japan’s big exporters were particularly hard hit as a stronger yen against the dollar hurt investor sentiment.
Privacy & Cookies Policy
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.