Japan economy shrinking during Q4 in body blow for ‘Abenomics’

Agence France‑Presse
February 16, 2016

Japan’s dependence on export-led growth contributed to the Japan economy shrinking in the last quarter of 2015 and Prime Minister Shinzo Abe‘s faltering bid to boost growth, Sasakawa USA’s Tobias Harris said in a series of articles by Agence France‑Presse, The Guardian and VOA published between February 14 and 16.

The risk is not that Japan faces an imminent financial crisis or that the Abe administration could collapse, but rather that the government’s economic program simply fails to achieve its goals.

Tobias Harris

“The latest data show that it is difficult to say that the Abe government has achieved of its goal of a ‘virtuous cycle’ of rising incomes, wages, and investment,” Harris said. “Japan has remained too dependent on export-led growth, which has suffered in light of China’s slowdown and the effects it has had on the global economy.”

“The risk is not that Japan faces an imminent financial crisis or that the Abe administration could collapse, but rather that the government’s economic program simply fails to achieve its goals… I wonder whether there’s any policy available that will reverse the appreciation we’ve already seen in light of China’s weakness and the effects it’s having on the world economy. It’s somewhat ironic that the fate of Abenomics seems to rest in the hands of Beijing.”

Despite the release of worse-than-expected data showing the Japan economy shrinking, stock prices in Tokyo rallied more than 1,000 points for a “spectacular recovery” Monday, states the article by VoA.

“I think it’s probably a function of rising hopes the Bank of Japan will move sooner rather than later to introduce new stimulus measures,” Harris said.

 

Read the articles here:

Japan’s ‘Abenomics’ on the ropes as yen soars, markets plunge (AFP, February 14, 2016)
Japan’s economy shrinks again as Abenomics is blown off course (The Guardian, February 14, 2016)
• Japan Economy Shrinking During Q4 in Body Blow for ‘Abenomics’ (AFP, February 15, 2016)
Japan Stock Market Surges Despite Bad Economic Data (VoA, February 16, 2016)

 

 

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