In early 2013, Japan’s late former Prime Minister Shinzo Abe launched a grand experiment designed to jolt Japan’s economy out of decades of stagnation. Known as “Abenomics,” it included three so-called arrows: massive monetary stimulus, increased government spending and significant economic reforms.
“Abenomics was, in very simple terms, a throw-it-all, buy-it-all strategy to try and stimulate growth. So, put massive spending into the economy, buy up government bonds, also implement economic reforms,” CNN’s Anna Stewart explained. “It was a way of trying to get mass employment, make people wealthier so they could spend more money, and just try and get the economy ticking.”
“During his premiership, you saw the Bank of Japan push interest rates into negative territory,” she said, adding that such a move was extremely unconventional at the time combined with “huge quantitative easing.”
Since then, such a move has become much more conventional, particularly in recent years since the pandemic with all sorts of central banks around the world — the US Federal reserve, the ECB, the Bank of England — all doing similar moves, she added.
Abenomics was successful as well — at least for the first few years, according to experts, Stewart noted. “Critics would say that not all three arrows were ever fully achieved, and as a result of that, the success was unfortunately, limited.”
“The problem for Japan was how to end what was very loose monetary policy, and also some of the structural issues, particularly with an aging workforce,” Stewart added.
However, the policy also led to record-high government debt and failed to make a lasting dent in decades of deflation, CNN’s Will Ripley reported.