Is this the end of an era for Japan's bankers? Abenomics, the programme of fiscal and monetary stimulus under Abe and central bank governor Haruhiko Kuroda, is unlikely to disappear overnight. But the country now faces unwelcome political uncertainty.
It is easy to forget the merry-go-round that was Japanese politics before Abe’s eight years in office. Between the exit of Junichiro Koizumi in 2006 and the election of Abe in 2012, Japan had six different prime ministers. That included Abe himself, whose first attempt at being prime minister lasted exactly one year.
In the weeks and months to come, inevitable questions will be asked about Abe’s time as leader. What did he achieve? How successful has Abenomics been? What could he have done better? Most reviews will be positive, albeit with caveats.
Bankers will tell you Abe’s attempts to stimulate the economy were undermined by consumption tax hikes, as well as insufficient structural reforms. But Abenomics, buttressed by aggressive monetary easing, still offered Japan’s best hope of resuscitating its economy.
No, it wasn’t the success that bankers and investors quietly hoped for. But it did offer something that had become increasingly rare for Japan's bankers — hope. As Abe prepares to leave office, that hope may be replaced by fear.
It shouldn’t. Japan's bankers have plenty to be optimistic about. The country still boasts globally-competitive corporate champions, not to mention some of the biggest banks in the world. It endured the Covid-19 pandemic much better than many other developed nations. It also still has the promise of all the pomp and ceremony of the Tokyo Olympics, now delayed to next summer because of the coronavirus.
It is also worth keeping a sense of perspective about the “woes” of Japan’s economy. It is impossible not to be charmed by the country, or to be impressed by how smoothly things run. How much would other countries give for problems like these?