Abenomics

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DEFINITION

Nickname for the multi-pronged economic program of Japanese prime minister Shinzō Abe. Abenomics seeks to remedy two decades of stagnation by increasing the nation’s money supply, boosting government spending and enacting reforms to make the economy more competitive.

INVESTOPEDIA EXPLAINS

After serving as prime minister briefly from 2006 to 2007, Shinzō Abe began a second term in December 2012. Soon after resuming office, he launched an ambitious plan to bolster Japan’s economy, which had been struggling with deflation and a lack of growth for nearly two decades.

Abe’s program consists of three “arrows.” The first consists of printing additional currency – between 60 trillion yen to 70 trillion yen – to make Japanese exports more attractive and generate modest inflation. The second arrow entails new government spending programs to stimulate demand.

The third component of Abenomics is more complex – a reform of various regulations to make Japanese industries more competitive. This includes making it easier for companies to fire ineffective workers, something that historically has been difficult from a legal standpoint. Proposed legislation also aims to restructure the utility and pharmaceutical industries and modernize the agricultural sector.


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