News / Asia

Japan's Big Spending 'Abenomics' Sparks Interest From Ailing Europe

Japan's Big Spending 'Abenomics' Sparks Interest From Ailing Europei
X
June 22, 2013
Not many politicians can claim to have had economic theories named after them - but the Japanese prime minister is now one. Shinzo Abe's program of big spending and loose fiscal policy has been dubbed 'Abenomics' - and with Japan recently showing what looks like strong growth, there have been calls for ailing European economies to adopt a similar strategy. Henry Ridgwell reports from London.

Japan's Big Spending 'Abenomics' Sparks Interest From Ailing Europe

TEXT SIZE - +
Henry Ridgwell
— Not many politicians can claim to have had economic theories named after them, but the Japanese Prime Minister is now one. Shinzo Abe's program of big spending and loose fiscal policy has been dubbed 'Abenomics' - and with Japan recently showing economic growth, there have been calls for ailing European economies to adopt a similar strategy.

Laughing with his fellow leaders at the final photo opportunity in Lough Erne, Japanese Prime Minister Shinzo Abe appeared highly satisfied with the outcome of this week's G8 summit in Northern Ireland.  He spoke at a press conference Tuesday.

Abe said that in the global economic discussion as well as in the bilateral talks, a strong interest was shown in the Japanese fiscal and growth strategies.

Analysts say much of that interest has come from Europe - which is suffering from low or negative growth, much like Japan had for the last two decades.  

"The short term relief that these programs can bring is, of course, something that is very welcome, would be very welcome in large parts of the euro area," Tobias Blattner, European Economist at the Japanese firm Daiwa Capital Markets.

Shinzo Abe describes Abenomics as having three 'arrows': monetary policies, or keeping down the value of the yen currency; huge fiscal stimulus - essentially printing more money; and encouraging growth through deregulation and policies like getting more women into the workforce.
 
So far it appears to be having an effect.

The yen has tumbled by over 20 percent against the dollar since last year.  That helped Japanese exports soar at the fastest annual rate in May since 2010 - up 10 percent from the previous year.  In the first quarter of 2013, Japan's economy grew by an annualized rate of 4.1 percent.

So should Europe's ailing economies take a leaf out of the book of Abenomics?  Takuji Okubo, Chief Economist at Japan Macro Advisors urges caution.

"When you look into the contents of the growth, you do see that half of the growth is coming from public demand such as public works, government consumption and that is still concerning, and that says that Japan's economy is still not self-sustaining," Okubo said.

When French President Francois Hollande visited Tokyo earlier this month, some French and Japanese media suggested he was going there for a lesson in 'Abenomics.'  France's economy meanwhile fell back into recession last quarter.  Hollande had this response.

"We have very different situations.  France is in the eurozone, and together with our partners, working together. Japan has the sovereign right to decide on its monetary policy and conditions alone," he said.

Blattner says President Hollande is being realistic. "Implementing the kind of Abenomic policies would not even be possible in the current framework.  It would only be possible at an aggregate level and, of course, there we have the skepticism of the core member states, the northern European economies like Germany, the Netherlands," he said.
 
So while Shinzo Abe appears to be speeding Japan's economic recovery - it seems Abenomics might not be one of the country's many exports.

You May Like

Photogallery Pope's Easter Prayer: Peace in Ukraine, Syria

Pontiff also calls for end to terrorist acts in Nigeria, violence in Iraq, and success in peace talks between Israelis and Palestinians More

Abdullah Holds Lead in Afghan Presidential Election

Country's Election Commission says that with half of the ballots counted, former FM remains in the lead with 44 percent of the vote More

Russia-Ukraine Crisis Could Trigger Cyber War

As tensions between Kyiv and Moscow escalate, so too has frequency of online attacks targeting government, news and financial sites More

This forum has been closed.
Comment Sorting
Comments
     
by: Kitagawa keikoh from: Daikanyama, JPN
June 22, 2013 7:54 PM
Japan had experienced the WW II and atomic bombs, and after that we have been working very hard to become one of the world top economic countries.
That's why we are recovering from the economic crisis, not because such meaningless politic strategy as Abenomics.

In Response

by: Yoshi from: Sapporo
June 23, 2013 10:41 PM
I think EU couniries need not pay attention to Abenomics because it seems merely a tempolary economic recovery.
Actually yen is again getting weak to dollar and stock plices are also getting down recently only a few months after the first action of monetary loosing. Those who have enjoyed weak yen and high stock prices are limited in big exporting companies and stock players.

Economic investment of firms is not yet prompted because domestic demands are not increased as expected. Workers wages and employment rate are not improved in general. A raise of consumption tax is planned next spring.

In Response

by: Samurai from: Japan
June 23, 2013 8:15 AM
I don't think Abenomix is meaningless. Mr. Abe is now following the way USA took several years ago, i.e., a departure from deflation. Japan has been in the straits of deflation for more than two decades. The only way to depart from the deflation is to cause Japan's economy to inflate (in this case, "reflation").

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Ukraine, Russia, United in Faith, Divided in Politicsi
X
Michael Eckels
April 19, 2014
There is a strong historical religious connection between Russia and Ukraine. But what role is religion playing in the current conflict? In the run-up to Easter, Michael Eckels in Moscow reports for VOA.
Video

Video Ukraine, Russia, United in Faith, Divided in Politics

There is a strong historical religious connection between Russia and Ukraine. But what role is religion playing in the current conflict? In the run-up to Easter, Michael Eckels in Moscow reports for VOA.
Video

Video Face of American Farmer is Changing

The average American farmer is now 58 years old, and farmers 65 and older are the fastest growing segment of the population. It’s a troubling trend signaling big changes ahead for American agriculture as aging farmers retire. Reporter Mike Osborne says a new report from the U.S. Census Bureau is suggesting what some of those changes might look like... and why they might not be so troubling.
Video

Video Donetsk Governor: Ukraine Military Assault 'Delicate But Necessary'

Around a dozen state buildings in eastern Ukraine remain in the hands of pro-Russian protesters who are demanding a referendum on self-rule. The governor of the whole Donetsk region is among those forced out by the protesters. He spoke to VOA's Henry Ridgwell from his temporary new office in Donetsk city.
Video

Video Drones May Soon Send Data From High Seas

Drones are usually associated with unmanned flying vehicles, but autonomous watercraft are also becoming useful tools for jobs ranging from scientific exploration to law enforcement to searching for a missing airliner in the Indian Ocean. VOA’s George Putic reports on sea-faring drones.
Video

Video New Earth-Size Planet Found

Not too big, not too small. Not too hot, not too cold. A newly discovered planet looks just right for life as we know it, according to an international group of astronomers. VOA’s Steve Baragona has more.
Video

Video Copts in Diaspora Worry About Future in Egypt

Around 10 percent of Egypt’s population belong to the Coptic faith, making them the largest Christian minority in the Middle East. But they have become targets of violence since the revolution three years ago. With elections scheduled for May and the struggle between the Egyptian military and Islamists continuing, many Copts abroad are deeply worried about the future of their ancient church. VOA religion correspondent Jerome Socolovsky visited a Coptic church outside Washington DC.
Video

Video Critics Say Venezuelan Protests Test Limits of Military's Support

During the two months of deadly anti-government protests that have rocked the oil-rich nation of Venezuela, President Nicolas Maduro has accused the opposition of trying to initiate a coup. Though a small number of military officers have been arrested for allegedly plotting against the government, VOA’s Brian Padden reports the leadership of the armed forces continues to support the president, at least for now.
Video

Video More Millenials Unplug to Embrace Board Games

A big new trend in the U.S. toy industry has more consumers switching off their high-tech gadgets to play with classic toys, like board games. This is especially true among the so-called millenial generation - those born in the 1980's and 90's. Elizabeth Lee has more from an unusual café in Los Angeles, where the new trend is popular and business is booming.
Video

Video Google Buys Drone Company

In its latest purchase of high-tech companies, Google has acquired a manufacturer of solar-powered drones that can stay in the air almost indefinitely, relaying broadband Internet connection to remote areas. It is seen as yet another step in the U.S. based Web giant’s bid to bring Internet to the whole world. VOA’s George Putic reports.
AppleAndroid