Abenomics is a term coined by the English speaking journalists to indicate the new economic and financial policies chosen by the Liberal Prime Minister Shinzo Abe for the Japanese economy after two decades of stagnation or recession in the country of the Rising Sun. In this period, the Bank of Japan has used exclusively the weapon of interest rates close to zero. The only viable solution according to the newly elected Prime Minister Shinzo Abe is a brutal shock. To put it succinctly, he proposed an expansionary monetary policy through public investment that does not care about the debt it produces. It measures for growth. As for the problems of the public debt, it is a concern for later. Now what counts most is to get the country out of the crisis.
The shift has allowed for the first time the Japanese economy to grow in the first quarter of 2013, posting a 3.5% of GDP on an annual basis. This growth is built almost entirely on the renewed confidence of consumers who have returned to spend as they did in the best years. The stock market is also booming. The stock market has returned to running, growing by 70% in a few months. They are now more cautious companies which have content for their investments.
What to think of Abenomics? Opinions are varied.
* In the United States there is prevailing perplexity. But it is true that the Japanese government bond rates are falling and since the country’s public debt is 90% in the hands of the Japanese themselves it is expected that at least 10% of them will sell their national titles to look for the most profitable investments in other countries thus also giving a boost to the economy of other countries.
* According to some analysts the renewed growth in Japan is illusory because the population is too old and it is already late to be able to raise the birth rate.
* Credit Suisse issued a report in which he explains why it makes sense to invest in Japan. The devaluation will be able to boost exports, GDP will grow at a rapid pace and companies have ample room for growth because they were accustomed to a low productivity.
* It is still doubtful that it is a growth junkie not supported by appropriate structural reforms.
The Abenomics stands as the third option between the European rigor and vaguely socialist style economic plans of the U.S., but it is the only road that has brought tangible results, at least for the moment.