Contrary to what critics have said, Abenomics is working, says Japan Finance Minister Manubu Sakai at Nomura’s 2016 Asia Investment Forum on June 7, defending the three-pronged strategy implemented by Prime Minister’s Shinzo Abe in 2012 to lift the Japanese economy out of years of contraction.
Abenomics, Sakai said, succeeded in hauling Japan out of deflation and changed the extreme “risk averse” mindsets of consumers and corporations. Not only have corporate earnings risen by over 40% since 2012 to a record high of JPY65 trillion ($829 billion) in 2015, GDP has risen to over JPY500 trillion from just JPY30 trillion, and unemployment has fallen by 3.2%, Sakai said.
That’s not all. Last year, the country’s overall wage rose by 3% yoy, the highest annual wage rise achieved in 17 years. Tourist arrivals have also surged, doubling to 19 million last year following changes in visa requirements.
“Aside from the easing of monetary policy by the Bank of Japan, Abe has extended fiscal stimulus and made efforts to strengthen the economy by restructuring and deregulating sectors such as agriculture. As a result, exports have risen and the economy has improve,” Sakai noted in his speech.
Abenomics involves looser monetary policy, higher fiscal spending and a nationwide restructuring in an all-out effort to boost growth. However, it recently drew flak for failing to stimulate growth after Abe hiked the consumption tax to 8% from 5% two years ago.
“The economy has been stagnant since 2014 and growth has zig-zagged around 0%,” says Takashi Miwa, chief economist at Nomura.
“Meanwhile, the yen has appreciated substantially despite the BOJ’s negative interest rate policy and the equity market has fallen. As such, there has been a lot of doubt over the effectiveness of Abenomics.”
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Abenomics, Sakai said, succeeded in hauling Japan out of deflation and changed the extreme “risk averse” mindsets of consumers and corporations. Not only have corporate earnings risen by over 40% since 2012 to a record high of JPY65 trillion ($829 billion) in 2015, GDP has risen to over JPY500 trillion from just JPY30 trillion, and unemployment has fallen by 3.2%, Sakai said.
That’s not all. Last year, the country’s overall wage rose by 3% yoy, the highest annual wage rise achieved in 17 years. Tourist arrivals have also surged, doubling to 19 million last year following changes in visa requirements.
“Aside from the easing of monetary policy by the Bank of Japan, Abe has extended fiscal stimulus and made efforts to strengthen the economy by restructuring and deregulating sectors such as agriculture. As a result, exports have risen and the economy has improve,” Sakai noted in his speech.
Abenomics involves looser monetary policy, higher fiscal spending and a nationwide restructuring in an all-out effort to boost growth. However, it recently drew flak for failing to stimulate growth after Abe hiked the consumption tax to 8% from 5% two years ago.
“The economy has been stagnant since 2014 and growth has zig-zagged around 0%,” says Takashi Miwa, chief economist at Nomura.
“Meanwhile, the yen has appreciated substantially despite the BOJ’s negative interest rate policy and the equity market has fallen. As such, there has been a lot of doubt over the effectiveness of Abenomics.”
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