0. Sumitomo Mitsui Banking Corporation
Japanese Economic Outlook “Abenomics” as a new economic policy in Japan
August 31, 2015
Fumio Hoshi
Advisor
Sumitomo Mitsui Banking Corporation

1. Japanese New Economic Policy – Abenomics 3 arrows Abenomics so far
Table of Contents
Japanese New Economic Policy – Abenomics
3 arrows
Abenomics so far
Opportunities and challenges
本講演では、
はじめに
ASEAN経済共同体・いわゆるAEC、 次に
東アジア地域包括的経済連携・いわゆるRCEP、
のご説明
最後に、簡単に
役割の変化が期待される統括会社について簡単に申し上たいと思います。
では、３ページ目をご覧下さい。
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2. Japanese New Economic Policy - Abenomics
Background
Japan lost 2 decades after the bubble economy collapsed – recession, strong Japanese Yen, stagnant stock prices, etc.
Key challenge – “Pulling out of continues deflation”
Peak of the bubble economy”
Data from 1985 to 2012
Source: IMF, Nikkei

3. Japanese New Economic Policy - Abenomics
Early 2013, Abe Cabinet launched a new economic policy – Abenomics
Ultimate objective - “Change mindset of Japanese people from deflation to inflation - 2% inflation target”
Abenomics - consists of “3 arrows”
Unlimited monetary easing through the central bank (Bank of Japan - BOJ)
Massive fiscal stimulus through public spending
Structural reform to improve economic growth potential

4. 3 arrows / 1st arrow - monetary easing
Measures
2% inflation target
Unlimited money supply / asset purchase through BOJ
e.g. Japanese Gov Bond purchase: Apr JPY50trillion (USD500bil), Oct JPY30trillion (USD300bil)
Negative interest rate
Objectives
Reduce (negative) interest rates
Weaken Japanese Yen vs USD
Increase exports
Lift up stock prices

5. 3 arrows / 2nd arrow – public spending
Measures
Massive government spending
(As of Jan 2013, JPY10trillion (USD100bil) extra budget approved)
Objectives
Contribute GDP growth – impact estimated 2%
600 thousand job creation expected
Stimulate private sector investment

6. 3 arrows / 3rd arrow – structural reform
Measures
Deregulation / regulatory reform
(e.g. medical regulation easing, labor market reform, adopting TPP - Trans-Pacific Strategic Economic Partnership Agreement)
Corporate tax reduction
Objectives
Facilitate private sector investment
Promote Japanese businesses globally
Improve Japan's human resources potential
Create new business opportunities – agriculture, energy, etc.

7. Abenomics so far Economic recovery Abenomics launched
Data from 2011 to 2015
Source: Japanese Gov, BOJ
Abenomics launched
Data from 2011 to 2015
Source: Nikkei

8. Opportunities and challenges
Change mindset from deflation to sustainable growth
De-regulation against “bed rock regulations” – agriculture, medical, health care, labor market, etc.
Real estate investment increase – office vacancy rate low, high-end residential condominium
Investment opportunities toward Tokyo Olympic in 2020
Increase number of tourists to Japan
Wage increase, job applicant ratio improve
Employment opportunities for women

9. Opportunities and challenges
Fiscal reconstruction – huge negative primary balance, government debt over 200% of GDP, etc.
VAT hike in 2017, other tax reform necessary
Post monetary easing
Falling oil prices (negative to inflation)
Demographic composition for labor market
Narrow path but may be achievable