Japanese Prime Minister Shinzo Abe's ruling coalition cruised to a big election win on Sunday, but record low turnout could weaken his claim of a mandate for reflationary policies to revive the economy.
Media projections showed Abe's Liberal Democratic Party and its junior partner, the Komeito party, on track to win more than 317 seats in the 475-member lower house, enough to maintain its "super-majority" that smoothes parliamentary business.
"I believe the public approved of two years of our 'Abenomics' policies," Abe said in a televised interview. "But that doesn't mean we can be complacent."
Many voters, doubtful of both the premier's "Abenomics" strategy to end deflation and generate growth and the opposition's ability to do any better, stayed at home.
Final turnout will be a record low of 52.4%, media estimated, below 59.3% in a 2012 poll that returned Abe to power for a rare second term on pledges to reboot an economy plagued by deflation and an ageing, shrinking population.
Market analysts said the outcome would be positive for shares and negative for the yen in the near term given expectations Abe will stick to a "Three Arrows" strategy of hyper-easy monetary policy, government spending and reforms.
But hopes for Abenomics where hit when the economy slipped into recession in the third quarter following an April sales tax
Wage increases have not kept pace with price rises, progress on a "Third Arrow" of structural reform has been limited and
data suggest any economic rebound is fragile.
Abe decided last month to put off a second tax hike to 10% until April 2017, raising concerns about how Japan will curb its huge public debt, the worst among advanced nations.
"Between now and the delayed tax increase, we need to revive the economy and find a path to fiscal rebuilding," said LDP
lawmaker Shinjiro Koizumi. "If you think about it in that way, even though we have won, there is no room here for celebrating."
Elections risk pays off
Abe called the election after just two years in office to strengthen his grip on power before tackling unpopular policies such as restarting nuclear reactors taken off-line after the 2011 Fukushima disaster and a security policy shift away from post-war pacifism.
The LDP-led coalition victory could ease Abe's path to re-election in a party leadership race next September, boosting the likelihood, but by no means guaranteeing, that he stays in power through 2018 and becomes one of Japan's rare long-term
The main opposition Democratic Party of Japan (DPJ) was unable to gain much traction, largely due to voters' memories of a 2009-2012 rule plagued by policy flip-flops, infighting and three premiers in three years.
Media projections showed the DPJ gaining from the 62 seats it held before the vote, but falling well short of the 100 seats it targeted.
The Japan Communist Party was on track to more than double its eight seats, winning support from protest voters loath to back the Democrats.
Analysts said financial markets would be reassured by political and policy stability.
But doubts persist over whether Abe will knuckle down on his "Third Arrow" of reforms in politically sensitive areas such as labour market deregulation making it easier to shift workers to growth areas but also to sack employees, and reform of the highly protected farm sector.
"Since the Abe administration puts emphasis on share prices, short-term, this will be a tailwind for higher stocks and a weaker yen," said Tsuyoshi Ueno, senior economist at NLI Research Institute.
"But medium-term, investors will be watching to see if Japan is changed structurally."
Progress has been limited so far, partly due to opposition from members of Abe's own party.
"I don't expect any big, bold moves," said Columbia University professor Gerry Curtis.
Abe could turn attention from the economy to his conservative agenda that includes laying the groundwork to revise the post-war, pacifist constitution and recasting Japan's wartime past with a less apologetic tone.
That agenda raises hackles in China and South Korea, where bitter memories of Japan's past militarism run deep.
"Revising the constitution has been our party's long-time aspiration ... But the hurdles for achieving this are very high," Abe said on Sunday. "We need to continue efforts to deepen the public's understanding (of the need to do this)."
Despite hefty wins, the LDP stumbled on the southern island of Okinawa, host to the bulk of the US military in Japan, boding ill for a plan to relocate a controversial US Marines air base that many residents want off the island altogether.
LDP candidates lost in all four districts on the island, media said.
The LDP had 295 seats and Komeito 31 in the 480-member lower house when it was dissolved for the election. Five seats were
cut through electoral reform.