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More Pressure Likely on Abe’s Growth Strategy

Financial markets may put more pressure on Prime Minister Shinzo Abe to revive Japan’s economy, after his disappointing growth strategy pushed stocks to a two-month low and the yen higher, a former Bank of Japan official said.

“For now it’s just a yellow card but it’s possible there will be a red card and stocks will decline more,” Hideo Hayakawa, 58, a former BOJ executive director who oversaw the financial system until March. “His failure to announce a solid growth strategy triggered these market reactions and the question is whether he will properly acknowledge this fact,” Hayakawa, who is now a senior executive fellow at Fujitsu Research Institute, said in an interview in Tokyo on June 7.

Abe on June 5 outlined his economic growth strategy, the third of three arrows along with monetary and fiscal stimulus in his Abenomics policies aimed at ending 15 years of deflation in the world’s third-biggest economy. An absence of steps to free up the labor market and a delay in implementation invited disappointment from investors, triggering a decline in stocks and a rise in the yen.

Bloomberg [1]

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