Over the past few years and tracing back Japan has been a country under constant contraction, whether it is often or takes a while. So essentially it is very difficult to gauge an economy which is no volatile. It is very difficult to analyze an economy that is again going towards a contraction, so what are to say about this instance?
Three years ago the new Prime Minister Shinzo Abe had proposed to end this constant state of recession and move towards a more stable situation. Under his time the central bank intervention was at an all time high and was policy to induce the economy. However; this over time was not the best policy to implement either because many analysts conclude that Japan has been on a track of deceleration which is a major contribution to its current state.
3 comments:
Japan's growth throughout the middle of the 20th century came from the Lewis two-sector model. The challenge now will be implementing carefully considered policies that optimize institutional frameworks and possibly change some long-standing traditions (things like seniority-biased pay). Intensive growth will have to be the route as much of Japan's available extensive growth capacity was used up in the golden years.
The shift from agriculture to industry mostly impacted the Japanese economy in the late 1900s and the bubble put the economy back a few steps, therefore the Japanese needs to get back on track. Abenomics is the newest hope, with its fight against deflation. The plan is three-fold and involves a massive increase in fiscal stimulus through government spending, a massive increase in monetary stimulus through unconventional central bank policy, and a reform program aimed at making structural improvements to the Japanese economy. With all these new reforms the economy should begin to thrive and the old policies will be left behind.
The whole concept of Abenomics has come with positives and negatives as any new policy introduced in times of economic downturn would. Although the policy has made some strides, it seems as if it's affects aren't helping economic growth enough. First off, China's economic instability has definitely had negative impacts on Japanese exports, along with dropping oil prices. Also, the increase in consumption- tax definitely was a setback for the economy, with few structural reforms having strong enough implications to rebuild.
However, with the enactment of the Trans-Pacific Partnership, things could be turning around. There is hope for innovation to spike. Also, with an optimistic outlook, the three arrows of Abenomics may yield more intense results for a growing economy. So long as Abe implements concrete goals for these changes to actually happen, there is substantial growth for the future of Japan.
Post a Comment