A setback for Abenomics

published 7 June 2013

Japanese stocks fell on Wednesday as traders registered their disappointment with the reforms from prime minister Shinzo Abe. This is the "third arrow" of three in the economic strategy known as Abenomics'. The package of reforms follows on from earlier moves to weaken the yen via quantitative easing (QE), and to help boost the Japanese economy through higher government spending. So far, Abenomics' has helped lift Japan's benchmark Nikkei 225 share index by 53%, while pushing the yen lower against the dollar. But the market has slipped back by about 15% in recent weeks.

What the commentators said:

But while it's true that "earlier exuberance was excessive", says Julian Jessop of Capital Economics, there is "an increasing danger that the pendulum may now be swinging too far towards pessimism". The success of Abenomics' is by no means guaranteed, but it "surely represents the right mix of policies to tackle Japan's problems".