Japan holds nationwide local polls, seen as litmus test for 'Abenomics'

TOKYO (AFP) - Japan on Sunday held nationwide local elections, seen as a referendum on Prime Minister Shinzo Abe's economic blitz as he tries to stimulate the nation's flagging rural businesses.

Voting began early on Sunday to elect mayors and assembly members across the nation, including in the capital, in the second round of local polls this month.

Mr Abe's ruling Liberal Democratic Party (LDP) regards the polls as a litmus test to evaluate his drive to resuscitate Japan's fortunes, dubbed "Abenomics".

Broadcasters' exit polls are expected to give a reasonable indication of the final outcome shortly after the ballot boxes are sealed at 8pm.

Mr Abe's ruling Liberal Democratic Party (LDP) secured strong support in the first round of local elections on April 12, winning a majority in assembly elections and all 10 gubernatorial races.

Mr Abe told Parliament in early April that local economies were gradually benefitting from his drive to revive Japan's fortunes, but admitted that some small to medium-sized businesses in the countryside had yet to benefit.

Since returning to power over two years ago, Mr Abe has issued a series of big-spending stimulus programmes to boost the economy, assisted by aggressive monetary easing by the Bank of Japan.

Big businesses and urban areas, like Tokyo, are seen to have benefited from Mr Abe's programmes, while rural economies have remained slow in the face of depopulation.

While share prices are trading around a 15-year high, the world's No. 3 economy is experiencing low growth, fuelling doubts over Abe's bid to lift Japan out of two decades of stagnation.

Earlier this month, Mr Abe ordered his ministers to draw up plans for fresh subsidies designed to resuscitate stagnant local economies, saying: "It is necessary to speed up the plans in order to stop depopulation there."

The local media said his government was likely to include the planned subsidies in a package expected to be announced in June as an effort to stimulate rural businesses.