Japan's economy is in a sweet spot

Five years after the launch of Abenomics, the programme of massive monetary easing and fiscal stimulus under Prime Minister Shinzo Abe, Japan’s economy is in a “sweet spot”.

Andrew Van Sickle
By
published
in Features

Five years after the launch of Abenomics, the programme of massive monetary easing and fiscal stimulus under Prime Minister Shinzo Abe, Japan's economy is in a "sweet spot", as Societe Generale's Takuji Aida told Bloomberg. GDP expanded at an annualised rate of 1.4% in the third quarter of 2017, the seventh successive quarter of rising GDP. This is the longest period of uninterrupted growth since 2001.

A stronger global economy, along with the weaker yen induced by quantitative easing, has given exports a boost. And companies have become more confident, says The Economist. Private investment has jumped by 15% in five years. Unemployment below 3%, has boosted consumption.

The hope now is that the labour market begins to produce significant wage increases, spurring a virtuous cycle of wage and price increases and thus finally propelling inflation to the target of 2%. Meanwhile, structural changes such as improving corporate governance, which has led to higher dividends, have made the stockmarket's strong earnings growth and low valuations even more appealing. The market rally looks far from over.

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Andrew Van Sickle
Andrew Van Sickle
Editor, MoneyWeek

Andrew is the editor of MoneyWeek magazine. He grew up in Vienna and studied at the University of St Andrews, where he gained a first-class MA in geography & international relations.

After graduating he began to contribute to the foreign page of The Week and soon afterwards joined MoneyWeek at its inception in October 2000. He helped Merryn Somerset Webb establish it as Britain’s best-selling financial magazine, contributing to every section of the publication and specialising in macroeconomics and stockmarkets, before going part-time.

His freelance projects have included a 2009 relaunch of The Pharma Letter, where he covered corporate news and political developments in the German pharmaceuticals market for two years, and a multiyear stint as deputy editor of the Barclays account at Redwood, a marketing agency.

Andrew has been editing MoneyWeek since 2018, and continues to specialise in investment and news in German-speaking countries owing to his fluent command of the language.

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