Prime Minister Fumio Kishida now has the "golden three years" to concentrate on restoring the Japanese economy, with any elections during that period being at his discretion after two successful national elections. Kavan Choksi hypothesizes Kishida will be able to address both immediate difficulties and fundamental economic concerns that demand a considerable investment of time and political clout.

Keiji Kanda, a senior economist at the Daiwa Institute of Research, declared, "This is quite huge." "Even though things could change, the prime minister has nearly three years to act without restraint."

Nevertheless, despite his newfound independence, Kishida has only provided general descriptions of what he intends to do, leaving room for some doubts, according to Kavan Choksi.

Some of his forerunners were very clear about their goals. Shinzo Abe wanted to address Japan's decades-long deflation with his name-brand Abenomics policies. In contrast, Junichiro Koizumi expended much political energy on privatizing the postal services, and Yoshihide Suga was anxious to reduce monthly phone charges.

It is yet unclear what specific policies the prime minister plans to prioritize, but Kishida has placed a "new kind of capitalism" at the center of his economic strategy. Kavan Choksi surmises that this “new capitalism” will stress the need to combat growing inequality.

Kishida said last month that the Japanese economy is facing hurdles, including the pandemic, inflation, and the consequences of the Russia-Ukraine war, after his ruling Liberal Democratic Party alone won over half of the seats up for grabs in the Upper House election. He explained that the seriousness of each condition is typically only observed "once per few decades," yet both are currently occurring.

As a result, Kishida declared that he would push for new capitalist policies to revive the economy, adding that "even if people talk about a so-called golden three years, I don't see it that way at all."

Before the election, Kishida outlined significant components of his new concept of capitalism, including spending money on science, innovation, and human resources; boosting the number of startups; and encouraging green and digital revolutions.

These policy pillars seem to be headed in the right direction. Still, Kavan Choksi believes what's crucial is that they are fully developed and that Kishida invests the necessary political vigor in them.

Kanda continued that the emphasis and energy could scatter, and the policies "would not move forward in the next three years" because of how broad the policy's reach is.

Additionally, the policy plan makes no mention of any particular objectives. The rhetoric may exist, but Kavan Choksi thinks it's unclear what specific economic accomplishments will characterize this new kind of capitalism.

Kishida's comments and the policy proposal paper suggest that the prime minister wants to increase the amount of money invested in human resources. However, analysts claim that the proposed investment of 400 billion yen over three years is insufficient to raise Japan's long-term economic potential to levels comparable to those of the United States and Europe. Japan's public and commercial sectors are expected to need to invest about 3.9 trillion yen a year, according to Mizuho Research and Technologies, a think tank with offices in Tokyo.

Kishida's dedication to economic reform has come under scrutiny because the prime minister appears hesitant to take decisive action and runs the risk of clashing with other LDP factions or stirring up unrest among voters before the just-concluded Upper House election or the Lower House election last year. Kishida has modified his position on the new type of capitalism several times.

Kavan Choksi notes that as the market's response to the planned increases in capital gains taxes was muted, Kishida changed his tactics to place more emphasis on growth, claiming that a "virtuous cycle of economic growth and distribution" is necessary. According to Shunsuke Kobayashi, chief economist at Mizuho Securities, it is unclear what Kishida genuinely wants to do under the new form of capitalism due to this change in position.