Abenomics Top of Japanese Voters Mind

December 2, 2014 Share Print 0

Japanese Prime Minister Shinzo Abe was elected two years ago on a promise to resuscitate the world’s third largest economy.

At best, his record has been mixed. Yet he’s gambled his future by calling snap elections for December 14 — asking voters to buy his cure of government spending, money printing and reforms for a second time.

So why is Abe confident enough of victory to risk being thrown out of office two years early? The simple answer: There’s no obvious alternative, politically and economically.

Japan’s opposition is in disarray, and opinion polls indicate his party will win again. That’s despite waning support for his economic strategy — known as Abenomics.

There are good reasons for this. Two years ago, the country was just beginning to emerge from a recession. As the election campaign kicks off Tuesday, the economy has slipped back into reverse.

That’s not to say nothing has changed. Higher government spending, massive monetary easing by the Bank of Japan, and modest progress on some reforms has fueled a stock market boom and reversed a trend of falling prices.

The benchmark Nikkei has risen nearly 65% from the beginning of 2013, and core inflation is near 1%.
At the same time, wages have lagged and many of Abe’s proposed reforms — the keys to sustained growth — failed to launch. On Monday, Moody’s slashed Japan’s credit rating and expressed reservations over the country’s rising debt levels.

via CNN

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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 has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. 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.