The Renewed Promise of Abenomics
On December 14, Japan’s voters signaled their overwhelming approval of Prime Minister Shinzo Abe's macroeconomic policies. With its renewed electoral mandate, Abe’s government must deliver on its promises – and that means decisive and comprehensive implementation of growth-enhancing structural reforms.
TOKYO – Japan’s Liberal Democratic Party scored a decisive victory in the December 14 parliamentary election, with Japanese voters demonstrating their overwhelming approval of Prime Minister Shinzo Abe’s macroeconomic policy agenda. Though voter turnout was relatively low, owing largely to the somewhat technical nature of the issues, the election’s message was clear: most Japanese abhor the prospect of a return to the grim economic trajectory that prevailed in Japan before “Abenomics.”
When the first “arrow” of Abenomics – a fiscal stimulus program – was launched nearly two years ago, asset markets' immediate response was positive. The second arrow of Abenomics – monetary easing – intensified these effects.
In the last two years, Japan’s stock market has almost doubled in value, increasing the wealth of Japanese consumers. Moreover, the yen has fallen by nearly one-third against the US dollar, from around ¥80 to nearly ¥120 per dollar, invigorating Japan’s export industries.