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Analysis

Abenomics after one year

by Gabriel Stein

Mon 10 Mar 2014

Abenomics after one year Enlarge Chart loading Image

What the chart shows: The chart shows the contribution of household consumption, net exports and capital investment to Japanese GDP.

Why the chart is important: A year after the start of Abenomics, the auguries for its success do not look too good. Q4 GDP was revised down from an unspectacular, but above-trend 0.3% (1% seasonally adjusted annualised rate, SAAR), to 0.2% (0.7% SAAR). The contribution of household consumption – a key component in the regeneration of Japanese economic growth – was revised down as well. Recent yen strength is hurting exports and domestic activity remains distinctly disappointing (if stronger than in 2012. The worry is that the failure of Prime Minister Abe to launch his ‘third arrow’ – structural reforms – will mean that Abenomics and Japan’s break out from a long period of deflation, may falter.

Chart and comments provided by Oxford Economics www.oxfordeconomics.com