Will Abenomics make it?

WHEN the Liberal Democratic Party returned to power in December 2012, Prime Minister Shinzo Abe vowed to restore growth and inflation through what is now known as Abenomics. This comprised three arrows – monetary policy, fiscal policy and structural reforms.

The monetary policy arrow caught the most attention, with the change in the stance of the Bank of Japan (BOJ) that aimed to push inflation to 2% per annum through massive quantitative easing. Given the current misgivings in the West about more quantitative easing, it is not surprising that there are also sceptics about the Japanese monetary stimulus.