Voters back Japan’s PM

Japan’s ruling coalition has won a new two-thirds majority in parliamentary elections flagged as a referendum on the country’s economic policies. Shinzo Abe was elected in 2012 and has tried to revive the economy by raising public spending and printing money. After an initial burst of growth, Japan slipped back into recession in the second half of this year, which many economists have blamed, at least in part, on an increase in sales tax, from five per cent to eight per cent in April.” The tax hikes came as Japan was under incredible pressure to do something about its debt mountain, which currently stands at about 240 per cent of GDP. Abe says he called the election to get a mandate to delay a second increase in the tax to 10 per cent, scheduled for 2015. "My 'Abenomics' policies are still only half-way done, Abe said on Sunday, adding that his government would not become "complacent". The majority of people, say they haven’t benefited from Abe’s economic programme, which polls show, have eroded real incomes. Less voters visited the polling booths, with turnout of about 52 percent, a post-war low, down from 59 percent in 2012, according to government data. "I am aware that there are still a lot of people who are still not feeling the benefits,” says Abe. But it's my duty to bring benefits to those very people, and I believe this election made that clear." Since the tax hike vehicle sales in Japan have tumbled, as reported earlier in the week by Autofile online. However vehicle manufacturers such as Toyota are reporting record profits. That’s thanks largely to the deliberate fall of the yen, triggered when the Bank of Japan unleashed two rounds of monetary easing to flood the financial system with cash. Toyota have hammered the home advantage of the weaker yen by boosting sales incentives to new buyers in markets including the United States. Nevertheless, next year Japan’s car industry is set to make more vehicles overseas than at home. “Japan gains in terms of profits repatriated, but domestic factories are left idle. The risk is also that poor corporate governance will allow firms to sit on their piles of profits indefinitely rather than putting the cash to work in the economy,” explained The Economist magazine earlier this month. The drop in the yen has also boosted the amount of used vehicle imports to New Zealand, with 118,384 crossing the border so far this year.