Since returning to office on December 26th, 2012, Prime Minister Abe Shinzo has used his Abenomics policies to target economic recovery in Japan. The key figures for December 2013 revealed that both business and consumer sentiment has improved since last year. It has also shown improvements in production, individual consumption, employment and wages, and stock prices. The Bank of Japan’s quarterly Tankan report also has shown improvement in short-term business confidence among large-scale manufacturers and some major corporations are stating to increase pay. These good indications hint at the first signs of the positive economic cycle promised by Abenomics and necessary for breaking free from deflation.
Despite these positive signs, there are still some reasons for concern. In the beginning of 2014, the peso in Argentina has plummeted, which is spreading uncertainty in emerging markets and triggering a rise in the yen and a fall in Japanese stock prices. If emerging markets continue to remain troubled, exports may decrease more than expected, which would cause to gains in the export sector due to 2013’s depreciation slip away. It will be interesting to see how the emerging markets affect Japan and its recovery.