Vaccine Czar Kono Will Win Japan Leadership Race, Say Economists
(Bloomberg) -- Vaccine czar Taro Kono is seen winning elections this month to become Japan’s next prime minister, supporting more stimulus for the pandemic-hit economy and continuity in central bank policy at least for now.
Some 27 out of 36 respondents in a Bloomberg survey of economists see Kono winning the race to replace outgoing premier Yoshihide Suga in a party election Sept. 29. Six analysts said they expect former foreign minister and ex-ruling party policy chief Fumio Kishida to win.
For the full survey, click here.
Like Kishida and his other main rival, former internal affairs minister Sanae Takaichi, Kono says he supports more emergency fiscal spending to help Japan’s flagging recovery, but he’s sounded more cautious about the size of the package than the others.
The median estimate from economists is for 30 trillion yen ($274 billion) in new fiscal spending. Half of the survey respondents said they expect more government borrowing will be needed to fund the package.
No matter who wins the race, economists see little immediate pressure to change the direction of central bank policy. Longer-term, analysts see Kono being in the position to nominate a new chief at the Bank of Japan who might favor a faster pullback of stimulus than current Governor Haruhiko Kuroda, whose terms ends in early 2023. Kono has signaled doubts about the bank’s elusive 2% inflation target.
“Whoever the next prime minister is, emergency measures in monetary policy will have to continue until the pandemic is over,” said economist Mari Iwashita at Daiwa Securities Co. “From the second half of next year, picking Kuroda’s successor will be important for the BOJ to move toward normalization.”
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