Political Shift and Economic Implications in Japan
The Liberal Democratic Party suffered a major defeat. The resulting political instability may negatively impact the economy. In the short term, populist measures might be implemented to gain public favor, leading to a weaker yen and a subsequent rise in stock prices. However, this will not fundamentally revive the economy.
In the longer term, I believe there is room for optimism. Until now, the ruling party has been too strong, holding a majority and implementing policies at will. While a genius leader could potentially improve the entire country, it is unrealistic to expect them to never make mistakes. Policies should be decided after listening to opposing views and engaging in discussions.
Although Japan has not been a one-party dictatorship under the Liberal Democratic Party, it has felt close to that. With the ruling party weakened by the recent election, more debates are likely to occur. In the short term, political instability may slow policy implementation and reduce decisiveness, potentially leading to stock sell-offs. However, this state is true democracy, and in the long run, I believe Japan will improve.