After the landslide victory that elected the LDP party into
the Japanese parliament, will reelected LDP head Shinzo Abe be able to revive
Japan’s two-decade long stagnant economy?
By: Ringo Bones
Former Japanese P.M. Shinzo Abe’s sweeping return to power
during the recent Japanese elections has been deemed a breath of fresh air to
the Japanese economy stagnant for two decades now. Abe’s proposals for reviving
the Japanese economy had already been dubbed as “Abenomics” and many tenured
Japanese economists already have high hopes that it could end the two decade
long Japanese economic stagnation.
For all intents and purposes, Abenomics is just Keynesian
Economics tailored in a way to end Japan’s two-decade long economic
stagflation. Newly reelected Shinzo Abe already promises to print more money
and spend it too boost the lagging infrastructure sector. Abe’s proposal for
the Bank of Japan to print more money despite of the projected 2 percent
resulting inflation could benefit Japanese exporters who had been hurt by the
super-strong yen.
Even though Abe inherited a split parliament, a stagnant
economy, the world’s biggest debt of any industrialized country which stands at
twice the country’s own annual GDP, the Japanese economy recently slipping back
into technical recession back in November and the country still reeling in from
the earthquake and tsunami that caused the Fukushima nuclear power plant
meltdown back in March, 2011, Tokyo stocks soared 1.6 % during Monday’s (December
17, 2012) opening over the news of Shinzo Abe’s reelection. Can Abenomics be
the key in tackling all of this?
Shinzo Abe’s promise to fix the now third largest economy
(sadly, Japan was overtaken by The People’s Republic of China as the world’s second
largest economy this year) by allowing the Bank of Japan to print more stimulus
money has its critics too. During the past few years, flushing newly printed
money to the Japanese economy did manage to devalue the yen long enough for the
benefit of the Japanese export industry seems to work only for a few days or so
before the weakened yen became super-strong again.
2 comments:
On his Roubuni Global Economics site back in April 2, 2013 Nouriel Roubini says that Abenomics is taking Japan into uncharted territory in terms of economics.
"Abenomics" - the buzzword is expected to end the 15-year-long Japanese economic deflation cycle. The new governor of the Bank of Japan, Haruhiko Kuroda, says that the latest stimulus will bring "mild inflation" back to the Japanese economy - i.e. they are aiming for an expected 2 per-cent inflation figures for the next two years. While the massive stimulus / government asset purchase scheme valued at 750-billion US dollars a year is expected to make the resulting Bank of Japan ETFs to stimulate the currently sluggish Tokyo stock exchange.
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