Four years on, Abenomics is still halfway to its goals — so we keep being told. So should we patiently keep waiting for the Abe administration's policies to shoot the economy forward, or should we question whether the right policies are being pursued?
Concern since the beginning of last year that Japan may be receding back to deflation — amid the yen's upturn in the face of uncertainties over the world economy, which clouded the prospect of corporate earnings, coupled with weak consumer spending and falling prices — has been replaced by a newfound optimism over the course of the economy since the November election of Donald Trump as the next president of the United States. Hopes that large-scale tax cuts, deregulation and infrastructure investments under the Trump presidency will drive the U.S. economy pushed up long-term interest rates and share prices in the U.S., which in turn sharply pushed down the yen's value against the dollar and drove up the stock market in Tokyo.
The optimism has been reflected in the Bank of Japan's quarterly tankan survey of business sentiments in December, which showed the first improvement in the confidence index of major manufacturing firms in 1½ years. In its monetary policy meeting last month, the BOJ revised its assessment of the economy upward, as did the government in its monthly economic report — for the first time in 21 months.