Japanese Election Results Hamper U.S. Objectives in Asia

Prime Minister Shinzo Abe faces a bleak political landscape following the ruling party’s landslide defeat in the July 29 upper house parliamentary election. Abe survived widespread calls for his resignation, and his Liberal Democratic Party (LDP) retains a two-thirds majority in the lower house, but his weakened position will force him to reprioritize policy objectives. Although his approval rating rose after he reshuffled the cabinet and LDP leadership on August 27, the honeymoon will be short-lived if Abe doesn’t quickly redress the electorate’s economic concerns. Investors will be looking warily for indicators that the LDP is postponing market-oriented economic reforms or increasing government spending to curry domestic favor.

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