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Merkel, Abe at Odds on How to Improve World Economy

Merkel, Abe at Odds on How to Improve World Economy

German Chancellor Angela Merkel and Japanese Leader Shinzo Abe differ on how best to boost the worldwide economy ahead of a G7 gathering this month.

New York, NY, USA, May 31, 2016 — While Abe made a trademark pitch for major boost in spending, Merkel said Germany was already doing what is needed, referring to the additional increase in domestic demand brought by the arrival of one million evacuees and transients a year ago.

The leaders of the European and East Asian trade powers will put forward their opposing views when Japan hosts a meeting of the G7 nations— including England, Canada, France, Italy and the US.

Head of Corporate trading at Nikko-Desjardins Asset Management, Stuart Poulson commented, “I think both Germany and Japan are taking the necessary steps towards financial recovery for world markets. With Merkel and Abe at the forefront we see very positive reforms on the horizon even if their philosophies on immediate action differ.”

Abe— who is known for his “Abenomics” endeavours to fortify financial growth through expanded open spending—has been urging G7 countries to make an increased effort to boost the world economy.

“We talked about the world financial situation and that we can’t simply sit tight for typical financial cycles, we need to proactively handle the dangers to restore the global economy,” he said.

“We require an acceleration of basic changes and broad monetary strategies,” he told a press gathering, after a meeting at Germany’s state visitor house, a palace north of Berlin.

Merkel, however, believes that Germany, Europe’s top economy, is doing what is necessary.

“With the numerous displaced people we took in a year ago, we saw a boost in consumption which, from my perspective, will generate improvement in the world economy,” she said.

She said Berlin encouraged a three-tier system of reforms, “We are looking to consolidate strong economic spending policies with improved development and increased investment.

Abe came to the presidency in December 2012 vowing to revive the world’s third-biggest economy.

Abe’s method yielded some results initially when the yen weakened rapidly, making exports cheaper and sparking a securities exchange rally. However, global economic weakness since has seen the yen rebound, as investors rush to the Japanese currency which is viewed as a safe haven.

Arin Takashi
Nikko-Desjardins Asset Management
Tokyo, Japan

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