lundi 22 décembre 2014

Abenomics gets a mixed report card

It's been two years since Japanese Prime Minister Shinzo Abe swept to power on his promise to bring the stricken economy back to life through his three-pillar strategy dubbed 'Abenomics.'

But how far has Abe gotten with his bold policy experiment featuring aggressive monetary easing, fiscal stimulus and structural reforms?

Progress has been made on three main fronts, according to Naohiko Baba, chief economist for Japan at Goldman Sachs: the Bank of Japan's (BOJ) effective monetization of government debt, a positive reaction in financial markets and an invigorated job market.

The BOJ launched an unprecedented easing program in April 2013, and has been buying the lion's share of newly issued Japanese government bonds (JGBs) to enable the government to spur demand via fiscal stimulus.

Read more: "We think it is safe to say that this strategy has generated more than the intended effect in this regard," Baba wrote in a note on Friday, referring to the reaction of financial markets to the BOJ's monetary stimulus. Perhaps the biggest beneficiary of Abenomics has been employment, said Baba

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