Home / Opinion / Views /  Debatable legacy of Abenomics that cranked up Japan

The assassination of Japan's former prime minister, Shinzo Abe, at the age of 67 has shocked the world.

A charismatic, nationalist and polarising figure from an elite political family, Abe will be remembered for revitalizing Japan's economy, the world's third largest; giving the country political stability; and raising its geopolitical stature.

Before his first term as prime minister that lasted just a year, 2006-2007, Japan had nine prime ministers in 16 years.

Abe returned to office in 2012, when Japan's exports were weak, trade relations with China challenging, and the people and the economy were reeling under the continuing impact of the 2011 nuclear disaster and tsunami.

Abe’s second term lasted eight years from 2012 to 2020, making him Japan's longest-serving prime minister. He was able to use his long years in office for undertaking economic reforms, although the extent of their success is debatable, and to steer the country out of the economic stagnation that had followed the bursting of property and stock market bubbles in the 1980s when Japan lost out to the new rising stars on the global economic stage. As Japan's economic stagnation came to an end, the national mood lifted.

Abe’s bold economic policies were christened Abenomics, the "three arrows" of which were fiscal stimulus through increased public works spending; ultra-loose monetary policy, or quantitative easing; and a fundamental overhaul of the economy through structural reforms.

The idea being to crank up the economy with low, and even negative, interest rates. Both monetary loosening and fiscal expenditures were meant to be temporary measures to tide over the pain from structural reforms, the chief strategy for achieving economic growth.

The Abenomics inflation target of 2% was never met, and disinflation remained a problem despite the central bank's massive programme of buying government bonds for stimulating the economy.

Abenomics wasn't a runaway success. Its critics point to Japan's deepening disparities and say it didn't provide the required foundation for sustainable growth. Also that Abenomics fell short on structural reforms. Wage growth was mute. As a result, Abenomics reduced in practice to the sole arrow of quantitative easing.

Still, jobs were created, protection for non-permanent workers improved and unemployment halved under Abe's watch, and a weak yen supported exports, generating optimism in the country, which ensured that his policies survived change of premiership. After his resignation owing to health issues, his successors, Yoshihide Suga and now Fumio Kishida, have not junked Abenomics, although the blow of the COVID-19 pandemic shock reversed a fair bit of the economic gains from these policies.

To redress the inequalities Abenomics is accused of promoting, Kishida has launched his own set of policies called “new capitalism" which prioritises income redistribution.

Another legacy of Abenomics is "womenomics" that sought to end the economy's structural gender bias that kept the female labour force underemployed for generations. It delivered modest results but did bring the underlying injustice that keeps women out of the workplace to the discourse in not just Japan, but many countries, including India.

At a time when globalisation and free trade were under threat, Abe led Japan into new trade deals. His vision was for “a free and open Indo-Pacific". After the US pulled out of the Trans-Pacific Partnership, TPP, in the pursuit of then president Donald Trump’s America First approach, Japan, led by Abe, became instrumental along with the remaining signatories in ensuring that the multilateral trade agreement didn't die.

Abe deepened Japan's alliance with the US to counter China's military rise and ambition, and its increasingly aggressive bid to dominate the South and East China Seas. His efforts to strengthen ties with India were part of this strategic stance.

Abe played an important role in the coming together of the Quadrilateral Security Dialogue, the Quad, a security grouping of Japan, the US, India and Australia, with the purpose of checking China’s assertiveness.

Japan's international standing improved with Abe's approach to diplomacy that could often be creative (he flew to the US and presented president-elect Donald Trump with a gilded golf club as soon as the US presidential poll results became known in 2016; that same year he also popped up at the closing ceremony of the Rio Olympics dressed as Super Mario).

Abe's contentious political agenda included support for whitewashing the wartime atrocities. He didn't want Japan to keep having to apologise for the Second World War, and felt that the country's post-war record of peace, international cooperation and economic progress ought to be taken more seriously by the world. He believed that the country's constitution that the US imposed on it after the war needed to be rewritten because it limited Japan's use of its military for self-defence.

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