The End of Abenomics?

Abe’s reign has failed to produce either the real economic, nominal or fiscal results that had been envisaged. The weak Yen has collapsed world trade prices, hasn’t recovered domestic capital spending, is unlikely to generate more nominal GDP inflation and also tends to have little impact on real imports or exports. Nominal GDP growth is roughly 1/10 of the average rate that the MoF assumed it would be achieving by now. So the MoF’s fiscal targets can only be met if authorities start a deflationary tightening of fiscal policy over the medium term. It is likely that the MoF will tighten fiscal policy via more pension and medicare cuts, something that will likely depress consumer sentiment further. Consequently, we wonder if Abe-nomics will soon be consigned to the history books.
Blog by Sophie

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