For a month, allegations have been flying that Abe and first lady Akie Abe granted political favors to a right-wing education group for a real-estate deal but following a key piece of testimony on Thursday, the worst appears to be over for the head of state.

Cherry blossom season begun earlier than expected in Tokyo this week in what may be an auspicious sign for scandal-hit Japanese Prime Minister Shinzo Abe .

Japanese Prime Minister Shinzo Abe at a budget committee session of the House of Councilors at the Parliament in Tokyo on March 24, 2017.

"It is increasingly unlikely that the scandal will fatally undermine the PM's administration," said Tobias Harris, Japan vice president at Teneo Intelligence, in a Friday note.

At the heart of the matter are reports that private educational institute Moritomo Gakuen bought heavily discounted government-owned land in Osaka for an elementary school. Morimoto's $1.2 million payment for the near 9,000 square meter area was a tenth of the cost of similarly sized plots nearby, according to local media.

The transaction, made public last month, fueled speculation that Morimoto used its connections with Abe's wife to obtain the cheap price. Akie was made honorary principal of the new school but quickly resigned when news of the land deal emerged.

On Thursday, Morimoto head Yasunori Kagoike testified under oath in parliament on the matter, saying he personally received an envelope containing $9,000 in cash from Akie during her September 2015 visit to Tsukamoto Kindergarten, a school operated by Morimoto. Akie has denied the transaction.

The scandal remains ongoing as Abe's approval ratings drop below the 60 percent level — opposition parties now want Akie to testify and finance ministry officials are expected to be questioned about the land sale — but many anticipate little damage to the PM's rule.

"Without additional evidence to corroborate Kagoike's story about the alleged donation, it is unlikely that it will significantly impact the prime minister," said Harris.



Jesper Koll, CEO of WisdomTree Japan and a longtime resident of the country, echoed those sentiments.

"Thursday's hearing was the climax of the scandal, and the bottom line is that the prime minister is highly likely to maintain his steadfast grip on power until 2021," he said in a note.

Scott Seaman, Asia director at intelligence firm Eurasia, also agreed Abe would not suffer any lasting damage, but warned that risks may increase if Ministry of Finance officials who arranged the land sale provided Morimoto with special deals or treatment.