Three things to expect with "Suganomics" Three things to expect with "Suganomics"
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Three things to expect with "Suganomics"

    NHK Senior Economic Commentator /
    NHK World Special Affairs Commentator
    Suga Yoshihide, the new leader of Japan's main ruling Liberal Democratic Party, is set to replace Prime Minister Abe Shinzo at the helm of the government this week. He says he will continue his predecessor's economic policies - but experts are already expecting a few differences.

    On September 2, Chief Cabinet Secretary Suga announced he would run in the LDP's leadership race. "I want to continue with and further enhance Abenomics," he said. This means the massive monetary easing and fiscal stimulus measures we've seen for almost eight years will likely stay in place, especially due to the damaging economic effects of the coronavirus pandemic.

    "I'd like to maintain the same relationship with the Bank of Japan," Suga added. And just like Abe, he shrugged off the idea of lowering the consumption tax rate. Nevertheless, Suga's background, reputation and recent comments suggest there'll be three key aspects.

    Strengthening local economies

    Suga was born and raised in Akita Prefecture, northern Japan, as the son of a strawberry farmer. Such roots might help explain his strong belief in boosting regional economies. He has repeatedly expressed pride about introducing a program in 2008 that allows people to pick which local government gets their residential tax.

    Suga has also suggested there are too many regional banks in Japan - especially as the population continues to fall in rural areas. He stresses the need to consolidate those with poor profitability while providing more support to small and medium-sized enterprises. Doing this will require regulatory reform - something Suga says he will carry out as prime minister.

    Cut-price politics

    Suga is a strong advocate of cheaper communication fees. He has constantly pressured telecommunications firms to slash mobile phone rates by as much as 40 percent, and might also take aim at other public utility charges, too. Still, experts say any price cuts could fly in the face of the government's 2-percent inflation target.

    On the other hand, Suga says another consumption tax increase may be on the cards - citing the government's mounting debts and a social security bill pushed ever higher by Japan's aging society. He was quick to stress that it wouldn't happen within the next 10 years, but that doesn't mean he won't move toward fiscal consolidation after the coronavirus pandemic.

    Digitization

    Promoting digitization has become a top priority ever since the pandemic began. The government's bungled distribution of subsidies to businesses and people led to growing public anger. The fact that IT infrastructure on the federal and local levels is not connected has made it difficult for those in need to navigate the online application system.

    Suga has also served as Minister of Internal Affairs and Communication. He recently put forward the idea of rearranging and unifying government institutions and having one single agency handle digital policy. He vows to break down the walls among different government agencies.