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HOME  > Past issues  > 2017 December 13 - 19  > Nearly 5-years and Abenomics far from effecting Japan's 'economic recovery'
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2017 December 13 - 19 [ECONOMY]

Nearly 5-years and Abenomics far from effecting Japan's 'economic recovery'

December 18, 2017
Akahata editorial (excerpts)

It will soon be five years since Prime Minister Abe Shinzo returned to power and inaugurated his second government at the end of December 2012. At the time of his comeback, he placed priority on "economic recovery" along with "disaster reconstruction" and "crisis management", but the country's economy still remains stagnant. Although the revised GDP for the July-September quarter of this year, which was recently reported, rose for seven consecutive quarters, its movement is still weak and fragile as it depends too much on "external demand". In particular, consumer spending accounting for about 60% of GDP, dropped 0.5% compared to the previous quarter. There has been no sign of people's living conditions improving for the better.

PM Abe has repeatedly said at every opportunity that his top priority is economic recovery and has had the policy named after him, "Abenomics", as the basis of the economic package. He came up with the so-called "three arrows" - bold monetary easing with the help of the Bank of Japan, flexible fiscal management by issuing extra government bonds, and a growth strategy based on further deregulation.

The three arrows are based on the "trickle down" theory: monetary relaxation and a fiscal expansion will lead to a devaluation of the yen and high stock prices, which in turn will bring profits to large corporations and the wealthy and will eventually increase job opportunities, wages, and personal consumption. However, the fact is that the large corporations and large asset holders have accumulated ever more wealth. The money never “trickles down” to the general public.

PM Abe then set out the "new three arrows" and "new package of economic policies" in his attempt to again tout the efficacy of Abenomics because he knows that the initial three arrows did not produce a favorable outcome. The new package also features preferential measures such as tax breaks for large corporations who succeed in increasing their "productivity". He, however, plans to implement corporate tax reductions in exchange for an increase in the consumption tax rate.

The collapse of Abenomics is already obvious to everyone. Modern economist Yoshikawa Hiroshi posted a comment on the five years of Abenomics in "Nikkei" in early December, noting that the economic growth rate has been low since the start of the Abe government. He pointed out, "The rate of consumer spending greatly affects the growth rate. The ongoing downturn in domestic consumption is a major problem affecting the Japanese economy." Even the Japan Business Federation (Keidanren) recently compiled a report stressing the need to improve people's income in order to break through the continuation of sluggish personal consumption. Without enhancement in people's livelihoods which will boost consumption, the country's economic recovery will never come about as promised.

Past related articles:
> Stagnant in main business, 3 megabanks will lay off 30,000 bank employees [November 17, 2017]
> Large corporations’ internal reserves exceed 400 trillion yen while workers’ wages remain stagnant [September 2, 2017]
> BOJ’s minus rate policy underlines failure of Abenomics[January 30, 2016]
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