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.
http://www.nippon.com/en/features/h00047/
4 Comments
The Abenomics have worked thus far, but how far is far? Maybe Japan is experiencing a boom such as our Greenspan era where we were tainted by success and visions of no imminent doom. Maybe consumers and their psychological outlook on the economy have changed due to hopefulness rather than the implementation of fiscal and monetary policy. Japan must remain skeptical if it wants to maintain a propitious future.
Here’s the Wikipedia page to Abenomics in case someone needs to look it up like I did: http://en.wikipedia.org/wiki/Abenomics
It’s great that Abenomics has led to positive signs of economic recovery. But one concern I have is that the weaker yen increases the cost of imports, which Japan relies heavily on due to the size of the country. The trend in exports remains unclear due to uncertainty in the emerging market. So it’s likely that Japan will have a larger trade deficit than before. It’s not necessarily a problem but Japan needs to pay attention to the issue.
Well I kind of talked about Abenomics in my previous post: http://econ398.academic.wlu.edu/2014/02/1590/
In this post, I said: “Japan’s economy only grew at an annual rate of 1% in the first three months of 2013, which is much lower than the 2.8% expected growth rate. ”
Can you show how much production, individual consumption, employment and wages, and stock prices improved in numbers?
Although these numbers suggest that the economy is improving, Japan needs to be concerned about its currency rate as Christy mentioned above.
What is the ceteris paribus scenario? Recovery from 3/11 no matter who was Prime Minister, a weakening of the yen with an improved [albeit hardly “good”] US and growing Chinese economy, gradual adjustment to population decline and a long period of low investment….it’s not as though interest rates weren’t low and monetary base high before Abe was elected and undertook a public campaign urging the Bank of Japan to engage in more quantitative easing.
To take one item, the depreciation of the yen began well before the election. Isn’t this rather monetary economists looking for anything and everything to bolster their claim that the Fed is doing enough (or even too much) and that fiscal policy is certainly not necessary?
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