Is there hope for” Abenomics”?
Is there hope for” Abenomics”?
Since his election as prime minister on December 26th, 2012, Shinzo
Abe had three main objectives to boost the Japanese economic growth.
1 / Monetary policy through quantitative
easing program,
2 / Fiscal policy through public
investment expansion
And 3 / Creation of Sustainable Growth
So he took the abbreviation “the 3 arrows”
Earlier this year, he began by voting a stimulus assigned to finance public
works, especially in areas affected by the tsunami.
Then, in April, the Japanese central bank began its quantitative easing
program by increasing the money supply to generate an inflation rate of 2 %
within two years and get the country out of deflation.
Although the first two arrows have stimulated the devaluation of the
Japanese currency overvalued by 20% against the dollar and achieving 4 % of
economic growth of 4 % , the third arrow is a challenge to achieve.
Jesper Koll , chief economist of JP Morgan Tokyo, believes that structural
reforms can only be achieved by changing
the investment behavior in new
businesses and the expansion of international trade .
Abe intends to reform the labor market by implementing deregulation
measures and reducing taxes, in order to increase the employment rate for women
and encourage more employees’ evolution. On the other hand, Mr. Abe launched a
fiscal consolidation plan to reduce the debt, which is two and a half times the
size of the third world economy. Another
main point of Obe’s plan is to reduce the prices and to increase consumption tax.
Despite the enormous
efforts of Abe government, some experts believe that poor income distribution
and weak domestic consumption would limit the recovery of the Japanese economy.
