- Japan’s ultra-loose monetary policy has failed to boost lending and inflation
- The scope for further fiscal stimulus is limited, while structural reforms are stalled
- Social inequalities are deepening due to institutional rigidity
When will Abenomics finally deliver? The economic policy launched by Japanese Prime Minister Shinzo Abe back in April 2013 and lauded by many around the world at the time seems to have proved ineffective. Its idea was to extricate Japan from two decades of sluggish or negative growth and a deflationary spiral. Its “three arrows” consisted of aggressive monetary easing, more government spending and structural reforms.
In August 2016, after elections for Japan’s upper house of parliament bolstered the prime minister’s position, a research team from the International Monetary Fund published a call for Abenomics to be “reloaded” and intensified. They stressed the need for structural reforms, a reduction of fiscal imbalances and an effort to reinflate the economy, notably through “wage policy.” More or less at the same time, the government announced another stimulus package.