Abe win does little to spur Japan's economy

Japanese voters just gave Prime Minister Shinzo Abe's "three arrows" economic revival plan another shot.

But they face a long wait for the plan to hit the target.

"I believe the results show that we have received a public mandate for the Abe administration's achievement over the past two years," Abe said after the results were announced Sunday. "But we should not be complacent about the results."

Though Abe's ruling Liberal Democratic Party could claim victory, calling it a mandate was a stretch.

With just a month to prepare for a snap election, the opposition Democratic Party of Japan fielded candidates for less than half the 475 seats in Parliament—giving the LDP a lock on the outcome. That may be why voter turnout—estimated by the Kyodo news agency turnout at 53 percent—hit a post-World War II low.

Mandate or not, the results did little to break the political gridlock that has delayed long-promised reforms

"Unfortunately, we fear that reform progress will remain glacial in coming years." Marcel Thieliant of Capital Economics economist said Monday in a note to clients.

Japan's much-heralded, three-pronged Abenomics revival plan is beginning to look like a two-legged stool.

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When elected in 2012 on a pledge to revive Japan's long-moribund economy, Abe promptly announced that he had three arrows in his quiver to meet that target.

The first involved aggressive monetary stimulus in the form of a stepped up bond-buying program by the Bank of Japan known as quantitative easing.

To help maintain demand for fresh debt, the central bank has been a big buyer, sucking up new bonds as the government prints more. In April, the BoJ was such a heavy buyer the Japanese 10-year Treasury stopped trading for a day – for the first time in 13 years.

To further spur growth, Abe's second arrow called for even more government borrowing and spending. More than $100 billion in fiscal stimulus was announced two years ago, further swelling a debt pile that is more than twice the size of Japan's gross domestic product.

For a time, the plan seemed to work. But after a surge in stock prices and burst of economic growth, Japan slipped back into recession in the second half of this year.

The reversal has been blamed, in part, on an increase in the sales tax to try to slow the pace of government borrowing. Last month, as he called the snap election, Abe pledged to delay a second tax increase scheduled for April.

Sunday's victory likely means further delay in Abe's "third arrow," a package of structural reforms critical to any revival that have proved much harder than boosting government spending or printing more yen .

"My 'Abenomics' policies are still only half-way done," Abe admitted on Sunday.

As the U.S. presses for reforms to boost trade, Japanese farmers remain dug in on a long-standing protective buffer of subsidies and tariffs. U.S. negotiators have also pressed Tokyo to ease barriers that restrict American auto makers and insurance companies.

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Abe's "third arrow" also includes labor reforms to boost productivity and make it easier for women to enter and remain in the workforce.

And while Abe has been able to boost spending by the government, business investment has stalled

With the economy shrinking, companies have been sitting on their cash.

On Monday, the Bank of Japan released a quarterly survey of business sentiment showing further deterioration in the outlook. Conducted before Sunday's election, the survey showed businesses still see slack demand and rising costs.

Unless businesses begin putting more capital to work, expanding operations, starting new businesses and boosting wages, slack consumer demand will continue to bog down growth

"If we don't see that come back then we've got trouble,"' said Seijiro Takeshita, an analyst with Mizuho International.

By CNBC's John Schoen. Follow him on Twitter @johnwschoen or email him.