Introduction
Japan’s longest-serving Prime Minister, Shinzo Abe, was shot twice on Friday while holding a speech at a political campaign event in the city of Nara. He has since died in hospital, and a suspect has admitted to causing the shooting with a homemade gun. During Abe’s time as the Japanese Prime Minister from 2012 to 2020, he followed an economic programme called Abenomics.
What is Abenomics?
When Abe became Prime Minister in 2012, Japan had been experiencing stagnation — a prolonged period of little or no economic growth — for two decades following an asset bubble collapse in the early 1990s. To revive Japan’s economy, Mr. Abe planned to use three “arrows”: loose monetary policy, fiscal stimulus, and structural economic reforms.
Abe introduced negative short term interest rates, making it cheaper for consumers and companies to borrow money, which in turn is likely to lead to increased spending. Quantitative easing was also introduced. To increase the money flow in the economy, the government spent money on improving infrastructure and gave companies financial incentives, for example tax breaks. Lastly, many structural reforms followed. Abe introduced a corporate reform, policies to increase the number of women in the workforce, labor liberalization, and made it significantly easier for migrants to enter the workforce (this has long been a point of conflict in Japanese politics).
Was Abenomics successful?
The BBC states although Abenomics was “certainly a success” in regard to political branding, it “fell short of Mr. Abe’s own key economic target.” After the policies that are now collectively referred to as Abenomics were put in place, the Japanese economy did grow. However, growth was not as fast as Mr. Abe hoped it would be. For example, the goal for 2020 was that the economy would be larger than 600 trillion yen, but this is still not the case.
The news agency Al Jazeera suggests that Abenomics was a “mixed success” as economic growth increased, exports rose, and unemployment rates reached the lowest level in decades. However, despite the eight consecutive quarters of positive growth between 2015 and 2017, John Power agrees with the BBC in that the economic growth achieved by Japan due to Abenomics was nothing compared to the rapid increase following World War II.
Abenomics: a lasting economic legacy?
In early 2020, Japan went back into recession, and Abe stepped down from his role as Prime Minister in the spring of 2020. Yoshihide Suga, who succeeded Abe as Prime Minister, continued Abenomics, while the current Prime Minister Fumio Kishida has “distanced himself from the strategy” (Al Jazeera).
Today, many economists give credit to Abe for putting Japan in a “more robust position” that enabled the Japanese economy to “withstand economic shocks” such as the COVID-19 pandemic (BBC Business), and the current Bank of Japan governor Haruhiko Kuroda also expressed his support of Abenomics. Therefore, one can conclude that Abenomics was an important step in lifting the Japanese economy out of decades of economic problems, but other economic policies are necessary to achieve all the hoped-for results.
Sources
- Abenomics: How Shinzo Abe aimed to revitalise Japan’s economy. 2022. BBC Business. Available at https://www.bbc.com/news/business-62089543 (Accessed 10 Juli 2022).
- POWER, John. 2022. ‘Abenomics’: Abe’s economic legacy aimed for Japan’s revival. Al Jazeera. Available at https://www.aljazeera.com/economy/2022/7/8/abenomics-abes-contentious-bid-to-fix-japans-ailing-economy (Accessed 10 Juli 2022).
- TAN, Yvette and Matt, MURPHY. 2022. Shinzo Abe: Japan ex-leader assassinated while giving speech. BBC News. Available at https://www.bbc.com/news/world-asia-62089486 (Accessed 10 Juli 2022).