World Economy

Abenomics Fails in Long-Term Effect

Abenomics Fails in Long-Term EffectAbenomics Fails in Long-Term Effect

The Japanese government said on February 15 that Japan’s GDP growth for the full year of 2015 was 0.4%, which dealt a further blow to Prime Minister Shinzo Abe’s stimulus measures.

After the release of economic data, Abe responded to questions of the opposition about the failure of Abenomics at the Lower House Budget Committee and said the Japanese economy still has solid foundation as companies have made more profits than any other year and over 1.1 million new jobs were created, Yonhap reported.

Last year’s GDP growth, though worse than forecast, doesn’t necessarily indicate the failure of Abenomics. After the stimulus was introduced in 2013, Japan’s GDP grew by 1.4%, zero and 0.4% annually in the following three years. The slow growth is nevertheless better than negative rate when the Democratic Party of Japan was in office.

According to statistics by the4 ministry of health, labor and welfare on January 29, Japan’s average ratio of active job openings to applicants in 2015 was 1.20, the highest since 1991. Earlier official releases put the 2015 unemployment rate at 3.4%, the lowest since 1997. In addition, the stock market rise, soaring profits of big companies and flooding of overseas tourists, all brought on by the weak yen, showed that Abenomics has to some degree boosted the sluggish Japanese economy.

However, lots of reasons still lead to the GDP growth of 0.4%. Yoshihide Suga, Japan’s chief cabinet secretary, blamed an exceptionally warm winter for the weakness of consumption, and individual consumption, which makes up 60% of Japan’s GDP, remains lackluster.

In 2015, nearly five million Chinese tourists contributed about 1.41 trillion yen ($12.6 billion) to the Japanese economy and brought some stimulus to Japan. But compared with Chinese tourists with open wallets, Japanese consumers are rather conservative.

Besides, while Abenomics has pushed up the profits of big companies, it failed to benefit ordinary people. The consumption-tax hike in 2014 has considerably dampened Japanese willingness to spend money. Japan’s economy also faces impacts from other countries such as slow growth of Asian countries including China, oil price slump in the Middle East, European debt and interest rate rise by the Federal Reserve.