This article provides a summary of the recent shocking leadership fragilities in Asia, between a developing country and a developed country. It explores the economic reason for the Sri Lankan resignations and, it pays tribute to Japan’s assassinated Prime Minister by assessing the success of ‘Abeconomics’.

Sri Lanka

After years of being in power, the Rajapaksa dynasty issuing the current President Gotabaya Rajapaksa, is being blamed for sinking Sri Lanka into economic bankruptcy. The country is near depletion of basic, imported necessities such as fuel, food and medicine. Daily blackouts last for hours at a time, schools have closed and queues for necessities, growing every day, have only suffocated the streets and engulfed cities. On the 11th of July, Sri Lanka has even halted emergency ambulance service in several regions.

Drowning in more than $50bn defaulted foreign debt, Sri Lanka has started negotiating a multibillion-dollar bailout package with the IMF. The IMF, as any money-lending international governmental organisation is known to require countries to implement strict fiscal policies which may potentially deteriorate the short-term standard of living of Sri Lankans further. Seeking further aid, Sri Lanka has also started debt-restructuring negotiations with countries such as China, India and Japan as well as with private bondholders. However, these negotiations are yet to be agreed on and will have to wait even longer amidst the resignations.

Following escalating protests, Prime Minister Ranil Wickremesinghe and President Rajapaksa have said they will resign as protestors raid the president’s home. Evidently, the party leaders have lost confidence in Rajapaksa and Wickremesinghe and are done waiting. After all, it is a state of emergency.

Japan

On the 8th of July, Japan’s former prime minister Shinzo Abe was fatally shot whilst campaigning in Nara. Having been an influential politician, internationally and domestically, his death was followed by a wave of shock and sadness. Condolences from world leaders has flooded the international stage with America recognising Shinzo Abe as “a champion of the friendship” for the two countries, Europe described him as an “an unwavering ally” and Quad countries commemorating Shinzo Abe as a “transformative leader” to his people and nation.

Shinzo Abe’s most influential legacy was “Abenomics”. It was an economic programme introduced from 2012 when Japan, the world’s third largest economy, was in recession. His vision was to lift Japan out of decades of stagnation through:

 Monetary policy: Negative short term interest rates to decrease cost of borrowing for consumers and companies’ consumption.
 Fiscal stimulus: Increasing government expenditure into the economy’s capacity of capital (infrastructure) as well as lowering taxes as incentives for companies.
 Structural reforms: Focussing on gender equality and welcoming migrants to meet demands of the labour market.

To commemorate Shinzo Abe, one can analyse the effectiveness of his programmes. To summarise, the Bank of Japan announced that Shinzo Abe had contributed to “pulling Japan out of prolonged deflation” and achieving “sustained economic growth”. This was truly tested in 2020 when COVID dampened its economy. Thus, this explains why the economy did not meet the ambitious targets that Shinzo Abe set. Furthermore, his structural reforms proved to be unsuccessful as large gender pay gaps and unhealthy work cultures still remains. Although, “Abenomics” failed in certain aspects, many supporters would still credit Shinzo Abe for pulling Japan from the “lost decade”. It may not have the ability to create a “virtuous cycle”, but it has clearly delivered results desperately needed at the time of introduction.

by Ke Thie Kiew

Economy and Leadership

Sri Lanka

Japan