By ELAINE KURTENBACH, Associated Press
TOKYO (AP) — After winning control of both houses of parliament, Prime Minister Shinzo Abe's government has the potential to be one of Japan's most influential and effective administrations in years.
Abe devoted the first seven months of his premiership to convincing a public weary of revolving door prime ministers that he has the wherewithal to lead a revival in the world's No. 3 economy and deserves a strong legislative mandate.
He now faces the challenge of adding substance to a recovery that so far amounts to little more than the smoke and mirrors of a surging stock market and one quarter of improved economic growth.
If it were easy, the reforms Japan needs would have been executed long ago.
Preliminary results from Sunday's election show Abe's Liberal Democratic Party and its coalition partner the New Komeito took a combined 76 of the 121 seats up for grabs in the 242-member upper house. Together with the seats they already held, they now have a combined 135 seats. The ruling bloc now has control of both chambers for the first time in three years, removing a roadblock to implementing its economic reform agenda.
Abe characterized the largely expected outcome as an endorsement of his "Abenomics" strategy aimed at wresting Japan from two decades of economic doldrums and political gridlock, but acknowledged the hard work lies ahead.
"What the people really want is to get the economy back to recovery across the country," Abe said Monday. "The severe scrutiny of the public is focused on us. We have to ensure we live up to their expectations," he said. "Today is the real start for us."
Since Abe took office following a lower house election victory in late December, aggressive monetary easing and government spending have helped pull the economy out of recession, as share prices surged and exports gained competitiveness thanks to a weaker Japanese yen.
In that effort, Abe has a powerful ally in central bank governor Haruhiko Kuroda, who committed the Bank of Japan to aiming for inflation of 2 percent within two years, vowing to end years of debilitating price falls to get growth back on track.
The economy appears headed for what Kuroda has called a "moderate recovery. It grew an annualized 4.1 percent in January-March, which along with the rising stock market has helped keep Abe's popularity ratings at robust levels of between 50 to 60 percent.
But economists say deeper, more far-reaching changes are needed to sustain growth, boost Japan's competitiveness and adapt the nation's institutions to its fast-aging population and a ballooning national debt.
"I think the honeymoon's over," said Jeff Kingston, head of Asian studies at Temple University in Tokyo. "The difficulty, it's going to be to make reforms happen."
In just a few months, Abe will face a decision on whether to raise sales tax from 5 percent to 8 percent, a move many worry could derail the recovery but is vital for Japan's financial health.
The muted reaction in Japan's financial markets Monday, with the Nikkei 225 stock index yo-yoing to end the day up just 0.5 percent, reflects the election's largely expected outcome, and also the widespread awareness of the obstacles ahead.
"We face a slew of difficult problems," Abe told reporters Monday. "But for the sake of Japan's future, we must tackle these issues."
The Liberal Democrats led Japan for most of the post-World War II era, presiding over the transformation of a defeated and devastated nation into a "miracle" of export-led industrialization. That model of growth is no longer viable for a post-industrial nation whose population is shrinking and aging and whose manufacturers have had to shift factories overseas in order to survive.
The Japanese face daunting challenges to maintaining an enviably high standard of living and vibrant democracy.
Farmers, the ruling party's traditional bedrock of support, are aging and abandoning their fields, while young, urban Japanese face dim job prospects and declining incomes — and the prospect of a government bankrupted by costs of supporting a huge elderly population.