Japan’s “Abenomics”

On May 26^th, leaders from the Group of Seven (G7) met on the Ise-Shima peninsula of Japan to hold their annual economic summit. For Japanese Prime Minister Shinzo Abe, the event could not have come at a better time. Held in the wake of an historic visit by U.S. President Barack Obama to the city of Hiroshima, the aftermath of the G7 has left Abe basking in the double glow of symbolic wartime reconciliation and international recognition. According to Professor of Public Diplomacy at Keio University and Cipher Brief expert Dr. Nancy Snow, Abe’s approval ratings have jumped to almost 56 percent this June from less than 50% in March and, as the pivotal House of Councilors election in July looms ever closer, Abe and his Liberal Democratic Party (LDP) government seem poised to win a solid majority.  

However, the smiles and handshakes at Ise-Shima cover some unsettling economic realities. For roughly 20 years, Japan has been stuck in a cycle of stagnation characterized by low growth, stunted inflation, fiscal deficits, and the developed world’s largest pile of public debt. When Shinzo Abe regained his seat as Prime Minister in December 2012, he did so on a wave of popular support, built primarily around his Three Arrows plan of economic reform. Shooting the “arrows” of monetary easing, fiscal stimulus, and structural reform was meant to revitalize the country, but almost four years on, Abe and “Abenomics” have largely failed to deliver. As the glow of international attention fades, can Shinzo Abe eventually deliver on his promises?