Abenomics Part Deux? Abe to Launch 3 More Arrows

Japanese Prime Minister Shinzo Abe is refocusing his attention back on the economy with an ambitious gross domestic product (GDP) target and three fresh “arrows” in what is being dubbed by some as “Abenomics 2.0”, but is this another case of over-promising and under-delivering?

Abe, who won a rare second term in the otherwise revolving door world of Japanese politics as the head of the ruling Liberal Democratic Party earlier this month, pledged on Thursday to raise GDP by nearly a quarter to 600 trillion yen ($5 trillion). He also unveiled three new goals for Abenomics : strong economic growth, assistance for child rearing to lift low birth rates, and social security measures to increase nursing facilities for the aged.

Abenomics is the term widely used to describe Abe’s approach to reflate the economy, which was originally based on three pillars: monetary easing, fiscal expansion and structural reforms.

Abe’s announcement comes as the economy continues to struggle with sluggish domestic demand and falling inflation. Japan’s main inflation gauge – the core consumer price index (CPI) – dipped 0.1 percent on year in August – slipping further away from the Bank of Japan’s 2 percent inflation target. It was the first year-on-year decline since April 2013, when the Bank of Japan launched its unprecedented asset-buying program.


Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza