What the experts say about Abenomics
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Tokyo/London — Japanese Prime Minister Abe Shinzo’s decision to step down on Friday because of worsening health will formally put an end to his Abenomics strategy, which tried to revive the world’s third-largest economy after decades of stagnation.
So how does Abenomics stack up?
Reuters surveyed 18 experts to gauge their perceptions of Abe on five areas: ending deflation; fiscal reform; labour-market reform; encouraging business and investment; and deregulation.
Respondents were asked to rate each topic with “achieved”, “partially achieved” or “failed”. Below are some highlights from their comments, gathered before Abe announced his resignation.
1. Ending deflation
Q: How do you rate Abe’s attempt to reflate the economy, create jobs and end deflation?
ADM Investor Services chief economist Marc Ostwald: Failed
“Outside a tighter labour market, but with no real impact on wages, the economy is way short of that ¥600-trillion [GDP] target and inflation continues to hover near zero.”
Top Down Macro chief economist Richard Jerram: Achieved
“Before Covid-19 hit, Japan had enjoyed several years of strikingly tight labour markets and solid growth [for Japan]. Inflation had edged into positive territory, while well below the Bank of Japan’s [BoJ] 2% target, but other developed economies have seen a similar difficulty in raising inflation despite solid growth, so we should not view Japan’s recent record too harshly.”
Schroders Tokyo Fund fund manager Masaki Taketsume: Partially achieved
“Japan has been through a long period of deflation, but because of Abenomics the Japanese economy has gotten out of deflation to a very low but still an inflationary environment
“At the same time, for the BoJ the offshoot target for inflation is the same as in other countries — which is 2% — and the current level of inflation is far short of that target.”
2. Fiscal reform
Q: How successful was Abe in fixing Japan’s finances and reining in public debt?
Asian Century Quest managing partner Brian Kelly: Achieved
“While the current Covid situation has shredded Japan’s fiscal situation like so many other countries, I would agree with the notion that he has largely accomplished what he set out to do — raising consumption taxes while keeping corporate taxes shielded from higher nominal rates.
“This policy, which has continued in various forms for decades, ensures that domestic consumption will remain stagnant.”
Harvard Kennedy School research fellow Paul Sheard: Failed
“The flaw in Abenomics was the reflationary policy shift at the BoJ, ...
So how does Abenomics stack up?
Reuters surveyed 18 experts to gauge their perceptions of Abe on five areas: ending deflation; fiscal reform; labour-market reform; encouraging business and investment; and deregulation.
Respondents were asked to rate each topic with “achieved”, “partially achieved” or “failed”. Below are some highlights from their comments, gathered before Abe announced his resignation.
1. Ending deflation
Q: How do you rate Abe’s attempt to reflate the economy, create jobs and end deflation?
ADM Investor Services chief economist Marc Ostwald: Failed
“Outside a tighter labour market, but with no real impact on wages, the economy is way short of that ¥600-trillion [GDP] target and inflation continues to hover near zero.”
Top Down Macro chief economist Richard Jerram: Achieved
“Before Covid-19 hit, Japan had enjoyed several years of strikingly tight labour markets and solid growth [for Japan]. Inflation had edged into positive territory, while well below the Bank of Japan’s [BoJ] 2% target, but other developed economies have seen a similar difficulty in raising inflation despite solid growth, so we should not view Japan’s recent record too harshly.”
Schroders Tokyo Fund fund manager Masaki Taketsume: Partially achieved
“Japan has been through a long period of deflation, but because of Abenomics the Japanese economy has gotten out of deflation to a very low but still an inflationary environment
“At the same time, for the BoJ the offshoot target for inflation is the same as in other countries — which is 2% — and the current level of inflation is far short of that target.”
2. Fiscal reform
Q: How successful was Abe in fixing Japan’s finances and reining in public debt?
Asian Century Quest managing partner Brian Kelly: Achieved
“While the current Covid situation has shredded Japan’s fiscal situation like so many other countries, I would agree with the notion that he has largely accomplished what he set out to do — raising consumption taxes while keeping corporate taxes shielded from higher nominal rates.
“This policy, which has continued in various forms for decades, ensures that domestic consumption will remain stagnant.”
Harvard Kennedy School research fellow Paul Sheard: Failed
“The flaw in Abenomics was the reflationary policy shift at the BoJ, ...