Election Context - The Japanese House of Representatives election on February 8, 2026, will significantly impact the political landscape and debt risk in Japan[1] - The ruling coalition, consisting of the Liberal Democratic Party (LDP) and the Japan Innovation Party, holds 233 seats, while the opposition coalition has 172 seats[2] - Current polls show Prime Minister Kishi's approval rating at 66%, with the LDP's support at 36%[2] Election Outcomes - Three potential scenarios exist for the election results: 1. LDP gains a solid majority (over 261 seats), reducing the need for aggressive fiscal stimulus[2] 2. LDP sees a marginal increase in seats, maintaining a need for cooperation with opposition parties, leading to moderate fiscal policies[2] 3. LDP loses seats, increasing political uncertainty and fiscal cliff risks[2] Fiscal Policy Post-Election - Post-election, Japan's macroeconomic policy will remain focused on expansionary fiscal measures, but with a more cautious approach to avoid a "Truss moment"[3] - Key commitments include a two-year suspension of food tax, which could create a fiscal gap of approximately 5 trillion yen annually, representing 17% of new bond issuance[4] Debt Risk Assessment - Japan's government debt is projected to reach 230% of GDP by 2025, with interest payments constituting 1.49% of GDP in 2024[4] - The fiscal deficit for 2025 is estimated at 40 trillion yen, with total revenues of 93 trillion yen and expenditures of 134 trillion yen[4] - Japan's net international investment position is strong, at 84% of GDP, indicating lower sovereign debt risk despite high debt levels[4] Market Implications - The election outcome will influence the external spillover risks associated with Japanese debt, particularly in terms of yen asset volatility and global liquidity[4] - The Bank of Japan's response to potential fiscal-driven yield increases will be crucial in managing market stability[4]
“大财政”系列之四：日债“豪赌”：选举后“高市财政”的约束
Shenwan Hongyuan Securities·2026-02-08 08:43