Sanaenomics: A New Wave of Economic Policies in Japan

Sanae Takaichi is poised to become Japan's first female prime minister, promising market-friendly policies. While inflation surpasses targets, wages have stagnated, prompting concerns. Her economic stance, dubbed 'Sanaenomics', prioritizes maintaining low interest rates and providing tax incentives for childcare amidst a shrinking, aging population, echoing her mentor Shinzo Abe's approach.

Sanae Takaichi is set to make history as Japan's first female prime minister, driving optimism in Tokyo's financial markets. Her election as head of the ruling Liberal Democratic Party has fueled hopes for market-friendly policies, reflected in the Nikkei 225's climb to near-record levels.

With inflation exceeding the Bank of Japan's targets, Takaichi plans to focus on controlling rising consumer prices while maintaining low interest rates, benefiting stocks but complicating inflation and currency efforts. Her promises of wage hikes lack detail, drawing on the legacy of her predecessor, Shinzo Abe.

Japan contends with demographic challenges amid labor shortages. Takaichi proposes tax incentives for companies offering childcare, aiming to tackle low birth rates. Her hawkish defense stance aligns with Abe, indicating strong ties with the US and military investments, despite public opposition to past deals with Washington.

(With inputs from agencies.)