Former Japanese Prime Minister Shinzo Abe’s legacy to the economy was defined by his namesake’s strategy.
Under “Abenomics,” Abe, who died Friday after being shot during a campaign rally, helped Japan’s economy after more than two decades of stagnation after the wealth bubble burst in the early 1990s. Tried to bring it back to life.
Abe’s strategy had three “arrows” aimed at introducing economic growth and higher wages: loose monetary policy, fiscal stimulus and structural economic reforms.
Under the first two “Arrows,” Abe, who was prime minister in 2006-07 and 2012-20, spurred tens of billions of dollars in spending on new infrastructure and cash, as well as ultra-low interest rates and quantitative easing. presidency over.
Abenomics’ reform aims to increase productivity by cutting red tape and corporate taxes, as well as expanding the country’s rapidly aging workforce by encouraging the participation of more women, seniors and immigrants.
“We should look to the future instead of worrying about the present,” Abe said in a 2016 speech outlining his economic prospects.
“Japan may be getting old. Japan could lose its population. But that is an incentive for us.”
mixed success
By most reports, Abe, who resigned for a second time in 2020 due to ill health, has had only partial success in transforming the world’s third-largest economy.
During his tenure, the recession of the 1990s and 2000s boosted economic growth, boosted exports and pushed unemployment to its lowest level in decades.
Between 2015 and 2017, Japan posted eight consecutive quarters of positive growth – the longest streak in almost 30 years.
But compared to the expansion of the great decades following World War II and the performance of many of its competitors, Japan’s economy has failed to impress.
According to an analysis by economist Kaya Keiichi, real GDP growth averaged 0.9 percent during Abe’s second nearly eight-year term as prime minister (excluding 2020, when COVID-19 derailed the economy). was.
Abe’s ambitious goal of boosting nominal GDP to 600 trillion yen by 2020 was never met and remains unfulfilled.
In addition, inflation and wage growth fell short of expectations, affecting the economic gains achieved.
“While government policies can, to some extent, create an environment for market participants to reform and innovate, greater efforts for household and business self-reliance are also needed to actually increase labor productivity and increase business investment in innovative technologies . Min Joo Kang, senior economist for South Korea and Japan at ING, told Al Jazeera.
“In this respect, the recovery of the real economy was limited. However, I think it was half the success that it saved the Japanese economy from a sharp recession. ”
While Abe’s immediate successor and ally Yoshihide Suga promised to continue Abenomics, current Prime Minister Fumio Kishida has sought to distance himself from the strategy and instead create a “new capitalism” that divides rich and poor. Rather used to the gap.
Last month, Abe branded an economic policy paper prepared by politicians in his Liberal Democratic Party as “silly” after the former leader felt the proposals were crucial to his signature economic policies, Asahi Shimbun reported.
Jeffrey Haley, senior market analyst for Asia-Pacific at OANDA, said Abenomics has delivered “mixed results.”
Haley told Al Jazeera, “The lack of will to implement the third arrow of economic and trade reform when Japan was stuck meant the other arrows only managed to keep the light going until 2010.”
“There is still no inflation, the national debt is high and Japan’s trade barriers and corporate governance are as unyielding as ever. The lack of progress was not because Abe was wrong strategically, but because he fully embraced all arrows.” Enforcing and executing was their failure to address government self-interest and inertia.
The post “Abenomics”: Abe’s controversial attempt to fix Japan’s struggling economy first appeared on Al Jazeera.
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