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Good News About Abenomics
Good News about Abenomics: Abenomics' Failure Will Let Korea Beat Japan in Per-capita GDP by 2020 | BusinessKorea
Shinzo Abe, prime minister of Japan, discusses his economic policies in a speech in London, June 2013.
21 OCTOBER 2014
The Korea Center for International Finance (KCIF) provisionally condemned Japanese Prime Minister Shinzo Abe’s economic policy as a failure, with concerns over the Japanese economy on the rise. “Signs of side effects of Abenomics are appearing these days, although we have to wait and see when it comes to economic stimulation,” the KCIF said on October 20, adding, “We are about to publish a report about the current state of and warnings against Abenomics.”\The danger signals mentioned by the center include a decrease in real purchasing power caused by inflation, slow private investment in spite of expansionary fiscal policy and quantitative easing, national income drain for the weak yen, and the collapse of small firms and the service industry.
“The Bank of Japan purchased government bonds in huge quantities to cause the prices to rise and the real purchasing power to drop,” it pointed out. The year-on-year inflation rate was negative 0.2 percent in December 2012 during the early stage of the policy package, but topped 1 percent in June 2013. It has remained at over 3 percent since the consumption tax hike on April 1.
The Japanese government’s quantitative easing is not working out, either. Japan’s real GDP growth rate was 2.3 percent last year, and most of that was led by the government’s 15 percent investment expansion. The GDP gap dropped from negative 8 percent or so to negative 0.3 percent between 2009 and last year. “Less GDP gap implies less growth potentials,” the KCIF explained, continuing, “The Japanese government’s expansionary fiscal spending is not leading to private investment and, besides, what little money is flowing into so-called zombie companies to deteriorate the efficiency of the economy.”
Another crisis factor is the weak yen. “The depreciation of the currency is causing the national income to leak abroad while driving service providers and small firms to bankruptcy,” it mentioned. According to statistics, a total of 214 Japanese companies went under between January and September this year due to the weak yen, while the number was just 89 for the same period of 2013.
Local economists, in the meantime, are predicting that the Korean economy would be affected by the failure of Abenomics, but could take the opportunity to overtake Japan in the long term. “Though there are a number of variables, Korea will be able to exceed US$40,000 in per-capita GDP by 2020 to surpass Japan by a margin of at least US$318 if it succeeds in economic innovation at an annual growth rate of 4.5 percent for years to come and Japan’s growth is limited to 1 percent a year,” research analyst Jun Min-kyu at Hankook Investment & Securities commented.
@Nihonjin1051
Good News about Abenomics: Abenomics' Failure Will Let Korea Beat Japan in Per-capita GDP by 2020 | BusinessKorea
Shinzo Abe, prime minister of Japan, discusses his economic policies in a speech in London, June 2013.
21 OCTOBER 2014
The Korea Center for International Finance (KCIF) provisionally condemned Japanese Prime Minister Shinzo Abe’s economic policy as a failure, with concerns over the Japanese economy on the rise. “Signs of side effects of Abenomics are appearing these days, although we have to wait and see when it comes to economic stimulation,” the KCIF said on October 20, adding, “We are about to publish a report about the current state of and warnings against Abenomics.”\The danger signals mentioned by the center include a decrease in real purchasing power caused by inflation, slow private investment in spite of expansionary fiscal policy and quantitative easing, national income drain for the weak yen, and the collapse of small firms and the service industry.
“The Bank of Japan purchased government bonds in huge quantities to cause the prices to rise and the real purchasing power to drop,” it pointed out. The year-on-year inflation rate was negative 0.2 percent in December 2012 during the early stage of the policy package, but topped 1 percent in June 2013. It has remained at over 3 percent since the consumption tax hike on April 1.
The Japanese government’s quantitative easing is not working out, either. Japan’s real GDP growth rate was 2.3 percent last year, and most of that was led by the government’s 15 percent investment expansion. The GDP gap dropped from negative 8 percent or so to negative 0.3 percent between 2009 and last year. “Less GDP gap implies less growth potentials,” the KCIF explained, continuing, “The Japanese government’s expansionary fiscal spending is not leading to private investment and, besides, what little money is flowing into so-called zombie companies to deteriorate the efficiency of the economy.”
Another crisis factor is the weak yen. “The depreciation of the currency is causing the national income to leak abroad while driving service providers and small firms to bankruptcy,” it mentioned. According to statistics, a total of 214 Japanese companies went under between January and September this year due to the weak yen, while the number was just 89 for the same period of 2013.
Local economists, in the meantime, are predicting that the Korean economy would be affected by the failure of Abenomics, but could take the opportunity to overtake Japan in the long term. “Though there are a number of variables, Korea will be able to exceed US$40,000 in per-capita GDP by 2020 to surpass Japan by a margin of at least US$318 if it succeeds in economic innovation at an annual growth rate of 4.5 percent for years to come and Japan’s growth is limited to 1 percent a year,” research analyst Jun Min-kyu at Hankook Investment & Securities commented.
@Nihonjin1051
