5 CHALLENGES BEFORE NEW PM
1 . North Korea’s leader Kim Jong-un has threatened to “sink” Japan into the sea and blasted two missiles over the northern island of Hokkaido in the space of less than a month.
Both launches prompted emergency evacuation orders but, with so little time to seek shelter, many Japanese feel a sense of helplessness in the face of the unpredictable threat from Pyongyang. Abe has steadily upgraded Japan’s military to counter the North’s threat, saying the time for talk is over and urging the international community to apply more pressure on the hermit state.
2 . The most pressing domestic issue for Japan is a ticking demographic time bomb that affects all areas of life from the economy to society. Japan is on its way to becoming the world’s first “ultra-aged” country, meaning more than 28 per cent of its population will be over 65. Very low birthrates and an expanding elderly population mean a shrinking workforce is having to pay for the ballooning cost of welfare. Despite a labour shortage, wages have not risen in a meaningful way. The mix of problems has pushed many young people to postpone marrying and starting a family, only adding to the demographic issue.
3 .Japan has managed six straight quarters of economic growth — its best run in a decade — but at a sluggish annual rate of 1.3 per cent, eking out a slight gain from the 0.9 per cent when Abe took power. Abe has sought to pep up the world’s third-biggest economy with a high-profile blitz dubbed “Abenomics”, a combination of big government spending and ultra-loose monetary policy from the Bank of Japan.But while the policy has fattened corporate profits and has sent the stock market to a 21-year high, it has failed in the goal of shrugging off the deflation that has plagued Japan for decades.
4 . Japanese government debt is at the highest level of any industrialised nation, more than double the size of its economy. Experts have long warned Japan must shrink its debt mountain or face a sharp increase in its borrowing costs and even the risk of default. But Abe has continued to issue new debt to fund stimulus packages to prop up the lumbering economy. Most of the debt is held by domestic, long-term, institutional players, shielding Tokyo somewhat from moves by fickle foreign investors.
5 . Japan has struggled to keep pace with globalisation and changing times, especially in its once-mighty corporations, which now lag behind their foreign competitors. The firms have been slow to get women in top positions and have struggled to integrate the older population. Some traditional male-dominated boardrooms have become scenes of scandals, such as at Toshiba where executives ignored codes of sound governance and hid financial losses.—