Is Abenomics No Longer a Good Thing?
It has passed around 4 years since Shinzo Abe was elected in 2012 as the prime minister. After the inauguration, he pledged to boost the Japanese economy, which had suffered from the depression at that time. Mr. Abe named it as Abenomics, with “three arrors” containing monetary easing, fiscal pragmatism and structural reform. To his mind, those arrows would dispel the anxiety about deflation. However, many people doubt about whether Abenomics plays its part. The efficacy is controversial even today.
On June 1, 2016, Prime Minister Shinzo Abe decided to push back the consumption tax hike from April next year to October of 2019, contrary to his remark in 2014 not to delay the consumption hike anymore. There was an apprehension that the households would spend less on their consumption and as a result, the economy would shrink precipitously, whilst the inconsistency in what he said versus what he did might been seen as a sign of the setback of Abenomics.
Some indexes go in the opposite direction. Consumer prices and the number of workers have been risen gradually since Abenomics took place. This accomplishment deserves praise. The increased consuming power will flow to profits of Japanese companies and labor force increase will make firms churn out their products, which could push up GDP.
Firms in Japan, however, are reluctant to invest their profits, trying to hold them back even if they earn more or the BOJ, Bank of Japan, lend them money at a minus interest. Contrary to the aim, the government borrows much from the bank in order to stimulate the economy additionally thorough ways like public expenditure. Will it really arouse the firms’ willingness to invest and purchase at last? I do not know.
In conclusion, Abenomics performs in its favour, but the extent is less satisfying than hoped. Several newspapers featured cutting corporation tax on small and medium-sized businesses yesterday. Theoretically, the decreased cost of production triggers its amount by companies, yet reality sometimes belies anticipation as it once. Even so, I hope that those attempts mentioned will bolster economy and Japan can lift itself up out of the spiral of deflation.