Nikkei drops despite Abe triumph in snap election
The Liberal Democratic Party won a convincing 290 seats out of 475 available in the powerful lower house of the Japanese parliament.
Abe called the election after arguing he needed a clear mandate to push back a planned sales tax hike and described the poll as a referendum on his economic policies, dubbed Abenomics.
The sales tax was due to rise from eight per cent to 10 per cent next October after rising from five per cent in April.
The Nikkei fell 1.7 per cent to 17,099 in response in Abe’s victory, however, as an underwhelming quarterly business survey hit sentiment.
Japan has seen a difficult year economically, falling into technical recession last month, and the sales tax was at least partly blamed for the poor performance.
Abe was initially elected in 2011 and his Abenomics programme promised to revive the economy through its “three arrows”.
These are fiscal stimulus, monetary easing and structural reforms. Although Abe managed to achieve some growth early in his term, the sales tax dulled the effects of monetary stimulus, prompting renewed action in late October.
Analysts also suggest that the final arrow is proving harder for Abe’s government to implement.
Speaking after the results were announced, Abe said that the election had been a “mandate” for delaying the tax rise and continuing with the Abenomics programme.
He added that he is now targeting wage rises, which have fallen behind consumer price rises, alongside third arrow reforms of areas such as agriculture.
The election saw a record low turnout among Japanese voters, estimated at only 53.3 per cent, a figure the government attributed to apathy and poor weather conditions.