Abenomics represents the economic policies that shinzo Abe’s administration implements. The purpose of such policies is to relieve the current deflation and active market. The three “arrows” of his policy are fiscal stimulus, monetary easing and structural reforms. Each of them is aimed at boosting Japan’s net export and fueling this export-oriented economy. In my opinion, though increase in GDP showed some effects of Abe’s policies, the effect so far has little impact.
Take monetary easing. The Japanese yen has devalued by nearly 30 percent since Abe took office, but the prices of Japan’s export products are still not competitive in international markets. Many industries have moved abroad due to expensive labor costs, and they will not be brought back simply due to Abe’s stimulus policies. In this case, the aim to stimulate export is of little effect.
As for consumers, the expectation of rise in price of goods will surely motivate consumers to purchase and household to invest when the interest rate is low. However, consumers will be anxious about devaluation of their income caused by inflation, therefore, they will tend to have tight-budget. I remain skeptical about the impact on consumption and investment.
In addition, when the time for the US to end QE nears, Abe’s monetary easing seems to lower foreign investors’ confidence on JPY. The financial market will keep going down.