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Retiring Abenomics

Outgoing Japanese Prime Minister Shinzo Abe's highly publicized economic-policy program was supposed to rescue Japan from years of disappointing growth, below-target inflation, and rising debt. But, in the end, the most that can be said for it is that it has offered a cautionary tale for other aging rich countries.

BERLIN – The official reason given for Shinzo Abe’s departure as Japan’s longest-serving prime minister was personal health. And now, his signature economic-policy program may be headed for a similar fate.

“Abenomics” was ushered in with great fanfare in 2013, so it is worth considering what it has accomplished over the past seven years. The official version on the Japanese government’s website has always featured three “policy arrows” targeted at aggressive monetary policy, flexible fiscal policy, and growth strategy, including structural reform.

Of these, monetary policy was clearly the biggest focus. The Bank of Japan (BOJ) launched a massive quantitative-easing (QE) program to buy up government debt, of which it now owns about half. But while the official goal was to push up annual inflation to 2%, that target has yet to be reached.