- Surging Covid-19 cases are putting increasing pressure on both the medical system and the government, as Prime Minister Yoshihide Suga struggles to contain a fourth wave ahead of three elections that will determine his political fate.
- Record rains throughout the peak Obon holiday week are further disrupting lives and the economy and diverting some of the government's focus from the pandemic.
- Possible challengers in September's Liberal Democratic Party (LDP) presidential election are emerging, with this weekend's Yokohama mayoral vote being Suga's last chance to show he can win.
The deteriorating Covid-19 situation continues to overshadow all other news in Japan. Though no major clusters have been definitively linked to the Olympics, the games coincided with a rapid escalation in infections in Tokyo and across the country that Prime Minister Yoshihide Suga's administration is struggling to contain. With the Delta variant driving daily cases in this fourth wave above 20,000–a four-fold increase on previous peaks–several prefectures are around 75% occupancy for critical care beds. Though the national figure remains around 50%, poor resource-sharing between prefectural administrations means that a few localities could soon confront a Covid-19 capacity crunch.
Suga's long-term electoral strategy, to delay calling this year's required Lower House elections until the pandemic situation improved, has been repeatedly undermined by the government's unsteady handling of the crisis, with approval rates slipping to 28% and recent polls suggesting that fewer than one in four approve of the government's response. This week's decision to expand and extend the largely nominal states of emergency to cover more than half of the population until 12 September, combined with a further JPY 300bn (USD 2.7bn) in business support funds, seems no more likely to stem the tide than the three previous iterations of this policy.
The response continues to focus on essentially peripheral measures such as moderate limits on department store and mall shoppers, alcohol-serving bans, and evening dining restrictions, the latter of which are weakly enforced and increasingly ignored by hard-up restaurateurs and pandemic-weary patrons alike, but together such measures do serve to dampen overall consumption activity. Proponents of escalating the restrictions to the level of lockdowns imposed in many European countries must contend with somewhat purist views about citizens' rights as well concerns about the economic impact.
The government's recent rapid U-turn after calling for hospitals to limit admissions to only the most severe cases only served to further the impression of a flailing administration. Suga's apparent hope that the accelerating vaccination program will head off the virus seems misplaced, with only around 40% of the population fully vaccinated to date and the Delta variant now more severely impacting the under-60 cohorts that have much lower vaccination rates than seniors.
On top of this came this week's torrential rains enveloping much of the country during the peak Obon holiday period, which have caused treacherous mudslides, road collapses and overflowing rivers, in Kyushu island, Hiroshima prefecture, and many other areas. Beyond the human cost of at least eight fatalities, destruction of property, and displacement of residents, the economic costs are starting to become apparent, with the temporary closure of two car factories indicative of the problems facing businesses. Politically, at least, the fiscal burden of response measures and potential criticism from the weak and splintered opposition parties are unlikely to be of any consequence for the LDP going forward. Indeed, Suga might even be able to turn the event to his electoral advantage, if he can link the record-breaking rains to global warming and tie them to the'green' policies that have been a main theme of his agenda.
This week's Q2 GDP data release also provided a modicum of comfort for the government, with the annualized growth figure of 1.3% being slightly ahead of what many economists had expected. Of the three main drivers of Japan's economic growth, consumer demand and private investment both ticked up over the previous quarter, as deferred domestic demand began to come through again in June after the easing of the previous state of emergency. The third component, exports, was also up around 3% on Q1 and saw further strong growth in July. Going forward, given Covid-19 challenges at home and the Delta variant's disruption of supply chains in Southeast Asia, it looks likely that Japan's recovery will remain decidedly slower than other major economies, and the prime minister may face pressure for another round of large-scale stimulus measures.
This is the context as Suga enters the most consequential months of his political career, with three forthcoming elections that will determine his fate. The intricacies of the election law are such that the prime minister has discretion until 21 October to call a Lower House election, and the poll can be held no later than 28 November; a later date is looking increasingly attractive as it would give Suga more time for the pandemic situation to improve. Even more pressing, Suga must secure re-election as LDP party president before his term ends on 30 September, with that vote looking likely to be announced on 17 September and held on 29 September. While the influential LDP Secretary-General Toshihiro Nikai has given his backing to the incumbent, former ministers Sanae Takaichi and Hakubun Shimomura this week became the first potential challengers to publicly indicate interest in entering the race. Neither would be leading candidates for the top job, but these declarations could open the gates for others to come through.
A bellwether may come from the result of the Yokohama mayoral election on 22 August. Yokohama is where the prime minister got his political start in the 1970s under then-Lower House member Hikosaburo Okonogi, and in this race Suga is backing Okonogi's son Hachiro, who recently resigned from a junior ministerial post in order to run. LDP candidates have underperformed in several races in the Suga era, including April's Lower House by-elections and July's Tokyo Metropolitan assembly elections. If his preferred candidate can't pull through on home turf, the PM may find his path to retaining office getting considerably tougher, though structural advantages mean that in any eventuality the LDP remain a safe bet in the fall general election
