Japan after two years of "Abenomics": Monetary illusions, timid reforms. So far, Prime Minister Abe's economic policy has missed its mark

Hanns Günther Hilpert

No 20/2015, SWP Comments from Stiftung Wissenschaft und Politik (SWP), German Institute for International and Security Affairs

Abstract: When Shinzo Abe became Prime Minister of Japan in December 2012, he raised great economic expectations. He promised a radical turnaround in monetary policy, long-term fiscal consolidation, and structural reforms to revive the economy. Two years on, the interim results of "Abenomics" are sobering. Despite unprecedented monetary expansion and vigorous fiscal stimulation, Japan has been unable to overcome deflation and weak growth. And although the consumption tax has been increased, the country is far from achieving sustainable budget consolidation. Abe has also failed to deliver on his promise to introduce groundbreaking structural reforms aimed at stimulating growth. Why have these goals not been achieved? In light of Japan's large - and growing - national debt and its ageing population, what other economic policy options can be pursued? (SWP Comments)

Date: 2015
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