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Japan: Abenomics losing its shine - BBH

FXStreet (Delhi) – Research Team at BBH, note that the much hyped abenomics is losing its shine with Japanese markets closed until Thursday and the after they re-open, Japan is expected to report that core inflation fell back below zero for the first time since April 2013.

Key Quotes

“Abenomics has lost its shine with the economy contracting in four of the past seven quarters. In some ways, Abenomics was a typical LDP program of fiscal and monetary expansion but on steroids. The reforms that are part of the third arrow have largely failed to capture the imagination of investors though we see the corporate governance reforms as significant."

“S&P's recent downgrade of Japan to A+, matching the earlier move by Moody's, was coupled with an ominous warning Abe will likely fail to reverse the deterioration over the next 2-3 years. Debt-to-GDP is around 246% and the budget deficit during the current fiscal year is near 6.2%, more than twice the size of the US shortfall.”

“Abenomics has succeeded in boosting the profitability of Corporate Japan. This is a function of the weaker yen and corporate tax cuts. The weakness of the yen has not been used to boost market shares for Japanese exports but has translated into greater foreign earnings.”

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