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Three Arrow Abenomics May Have Lessons for the West

Three Arrow Abenomics May Have Lessons for the West

Japanese Prime Minister Shinzo Abe ‘s bold plan and three-arrow approach of monetary easing. Coupled with Japan’s business deregulation and unprecedented government spending.

Paris, France, May 24, 2016 — This may just be the best model to counter the economic defeatism currently visible in the west, according to Steve Rogers, the Director of Asset Allocation at Orix Capital Trading.

He suggests that the early success of Japan’s Abenomics policies may bring new hope to other countries suffering from sluggish economies. The policies were introduced after Prime Minister Shinzo Abe was re-elected to his second term in December 2012.

Mr Rogers does not ignore the fact that Japan has not been the economic giant that it used to be in the past. There was a time when Japanese management was looked upon with awe and Japanese conglomerates were feared for their aggressive growth. Many economists believe that Japan’s fall from the pedestal may not have been a result of incompetence but an inevitable trajectory that similar economies have to go through.

According to Mr Rogers, western countries are currently in a similar position as Japan had been before the attempt of Abenomics to inject some vitality into the economy. Orix Capital Trading has been closely monitoring Japan’s economy and has seen it rising like a phoenix from the stagnation of the past twenty years with the new policies. Mr Rogers points out that Japan has problems that could very well have kept the economy on its defeatist path like other western countries, but the government has taken an aggressive stance against them.

It is well known that Japan has struggled for a while with its aging population. The country has its persisting structural problems as well, which includes a notorious culture of discrimination against women. The country’s debt is far higher as a proportion of its economy when compared to Greece.

These problems have, indeed, contributed to the stagnation of the past two decades. It is Mr Rogers’ opinion that these were common excuses made by Japanese officials that have kept the country on its inertial path of economic torpor. He also mentions that the Abe government is very aware that these problems of Japanese society were made worse by the torpor. The short-term economic boost that the government is providing may not be able to rid it of all these problems, he says, but there may be a light at the end of the tunnel.

Mr Roger’s analysis of the impact of Abenomics shows that things are already looking up for Japan’s economy in the first quarter of 2013. Japanese stocks are rising, and Japan’s economic rebound is and growth is faster than western economies. Europe’s economy has faltered and doesn’t show signs of recovery yet. US economic growth is significantly slower than that of Japan.

It is not enough to consider the numbers of only a single quarter for basing evaluations on, cautions Mr Rogers, but the kind of optimism in the Japanese economy currently is what is much-needed in the west, according to him. The general optimism is indicative in the rising stock prices and interest rates. The Japanese Yen has also fallen, which is a positive development because it has boosted the competitiveness of the Japanese tourism and exports industries.

Source: Steve Rogers, Director of Asset Allocation – Orix Capital Trading.

Ichiro Hoshi
Orix Capital Trading
Tokyo, Japan


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