Abenomics

Introduction

Shinzō Abe,is the current Prime Minister of Japan. Abe became the 90th Japanese Prime Minister when he was elected by a special session of the National Diet on 26 September 2006. He became Japan's youngest prime minister since World War II, and is the first to be born after the war. Abe served as prime minister for less than a year, resigning on 12 September 2007. He was replaced by Yasuo Fukuda, beginning a string of Prime Ministers, none of whom retained office for more than one year.

On 26 September 2012, Abe defeated former Minister of Defense Shigeru Ishiba in a run-off vote to win the LDP presidential election. Abe became the Prime Minister again on 26 December 2012, following the LDP's landslide victory in the 2012 general election. He is the first former Prime Minister to return to the office since Shigeru Yoshida in 1948. It takes its name from Prime Minister Shinzo Abe, who returned to power with his Liberal Democratic Party (LDP) in December 2012. Abe’s first term as premier in 2006-2007 was forgettable but he is now slowly reshaping Japan.

What is Abenomics?

Abenomics is meant to resolve Japan's macroeconomic problems. It consists of monetary policy, fiscal policy, and economic growth strategies to encourage private investment.

The detailed policies includes inflation targeting at a 2% annual rate, correction of the excessive yen appreciation, setting negative interest rates, radical quantitative easing, expansion of public investment, buying operations of construction bonds by Bank of Japan (BOJ), and revision of the Bank of Japan Act.

Fiscal spending will increase by 2% of GDP, likely raising the deficit to 11.5% of GDP for 2013. In 2012, the National Diet passed the bill to increase the consumption tax rate to 8% in 2014 and 10% in 2015 to balance the national budget, and it is expected that the tax hike will discourage consumption. In 1997 the consumption tax was increased from 3% to 5%, and then deflation started; the nominal...