It’s been a long time since Japan has been in the diamond industry’s headlines. Indeed, the last major occasion was when it was knocked off the number two spot in the global ranking of diamond consuming countries by China several years ago.

For Japan, it has been a long downwards economic spiral for more than two decades as successive governments have failed to find a way to get the world’s long-time second-biggest economy moving. Having already been overtaken in that sphere by China as well, and seeing Germany creep up on it from fourth place, some observers believe the country might not be seeing any salvation anytime soon despite the big victory achieved by incumbent Prime Minister Shinzo Abe.

Even Abe's renewed mandate is in some doubt since the opposition Democratic Party of Japan fielded candidates in fewer than half the 475 seats in Parliament having had just a month to prepare for a snap election. That gave Abe's ruling Liberal Democratic Party a huge advantage. And voter turnout, estimated at only just over 50 percent, a post-World War II record low, was hardly a ringing endorsement, either.

Consequently, many analysts are unsure whether the election result will help to break the political gridlock that has held back long-promised reforms

Abe was elected in 2012 with a promise to revive Japan's long-waning economy, and for a while, he seemed to be succeeding. But after a surge in stock prices and burst of economic growth, Japan slipped back into recession in the second half of this year.

Part of the reason for that reverse is an increase in sales tax aimed at helping to reduce government borrowing by raising revenue. But, instead, it has served to deter consumers from spending in the stores. It was hardly a coincidence that as Abe called the snap election in November, he vowed to delay a second tax increase due to go into effect in April 2015.

The new government faces a long list of obstacles and reforms that successive administrations have avoided having to deal with simply because they are so momentous and difficult to achieve. Although Abe could claim his election victory gives him the mandate to do so, analysts believe the aforementioned circumstances of his election win will stymie him.

The United States has been pressing Japan for years to boost bilateral trade by relaxing barriers that prevent American carmakers and insurance companies from getting a firm foothold in the market. Needless to say, Japanese competitors in those fields have been, and continue, to fight this tooth and nail. Another issue is dealing with subsidies and tariffs that Japanese farmers have long enjoyed and which are also a powerful lobby group.

Abe would also like to introduce labor reforms in a bid to raise productivity. However, the famous Japanese tradition of a job for life as a company man/woman make this a huge challenge for the new government – and may even be politically impossible. He also needs to persuade business to stop sitting on their cash and invest it in order to create more economic activity – and jobs. For now, the only spending is being done by the government. And a Bank of Japan quarterly survey of business sentiment published earlier this week showed a further deterioration. All that businesses reported seeing was sagging demand and rising costs. And therein lies the rub: if businesses cannot be persuaded to start putting more of their money to work, to expand operations and launch new businesses and raise salaries, then loose consumer demand will continue to restrain growth

From a foreign standpoint, Abe's goals of bringing about conservative dreams such as overhauling the pacifist constitution and pushing for a more sensitive view of Japan’s warring history are both of concern and appear to be completely irrelevant to the economic tasks needed. Ironically, this may be easier for him to achieve than bringing about his famous 'Abenomics' program of monetary easing, increased government spending and structural reforms to cut the bureaucracy that has long restricted the economy.

While the Bank of Japan has been printing money for the last two years – thus lowering the value of the yen – which keeps exporters happy and sending the stock market higher, it has not helped bring about a rise in consumer spending particularly not on imports such as diamonds and jewelry.

One of the toughest problems facing Japan is one that even the re-elected Abe is unable to do much about: for the past 20 years or so it has had one of the lowest birth rates to be found anywhere in the world. Japan’s working-age population (people aged 15-64) spiked in 1995 and has been going down ever since, while that of the United States, for example, has grown by a fifth in those 19 years. Its working-age population is forecast to slump to just over 50 million in 2050 from almost 80 million currently. Meanwhile, Japan's population has fallen for three consecutive years from a peak of 128 million in 2010.

This provides an almost certain guarantee of the long-term decline of Japan's economy. Meanwhile, the size of the workforces of the United States and India are forecast to expand over the long term. Other countries facing similar problems have, of course dealt with it by allowing immigration, however that is regarded by the inward-looking Japanese mentality as all but impossible. And if all those issues were not enough, Japan's average lifespan of 83 years – among the longest in the world – puts its economy under even greater strain and helps to raise government debt further. And that is one of the reasons for Abe's unfortunate sales tax increase earlier this year – the government needs to raise revenue, but is only succeeding in keeping potential shoppers out of the stores. The rise in sales tax last April to 8 percent from 5 percent served to put a brake on consumer spending and slowed what appeared to be a promising economic recovery. Abe responded to the disappointing economic circumstances by delaying a second tax hike originally planned for October 2015 and pushing a new round of monetary easing and government spending. Although the jobless figures declined to 3.5 percent in October, the majority of the new positions created are reportedly temporary or part-time jobs with low pay and few benefits – hardly a catalyst for a rise in consumer spending.

Declining jewelry sales in Japan have been reported by several jewelry and luxury goods retailers and point to the ongoing decline in interest in buying such items. Tiffany & Co. reported that revenue rose 5.3 percent on the year worldwide to $959 million in its third quarter that ended on October 31 with sales rising across all areas apart, however, from Japan where there was a decline of 12 percent and same-store sales fell 6 percent. Meanwhile, Richemont reported that revenue rose 2 percent on the year to $6.75 billion for the half year ending September 30, but in Japan, revenue slumped by 13 percent. And in polished diamond imports, while Japan has seen a rise of around 5 percent so far this year to around $600 million, this hardly a resoundingly large import figure for the world's third-richest country with a population of more than 120 million.

Will Abe succeed in turning around the Japanese economy and put more money into consumers' pockets? The evidence appears to show that it is unlikely, however the diamond jewelry industry needs a revival in sales in Japan at a time when China is slowing down and the United States, despite being on a strong recovery path, is saturated with supply.