Whither Abenomics

Akio FujiiJanuary 30th, 2013

Abenomics

• It’ the Economy Stupid!! until upper house election・ What is Abenomics? 1. Aggressive Monetary Easing 2. Fiscal Stimulus 3. Growth Strategy• Abenomics Bubble?　　　 Nikkei Index, Yen　　　 Biggest recovery since 2005 　 Election

Global Response

• “Japan Step Out” Paul Krugman• “Right on Monetary 　 Side, but…” Adam Posen• “The Wrong Growth Strategy for Japan” 　

Martin Feldstein・Ｂｉｇ３ are nervous・Ｇｅｒｍａｎ are nervous Melkel・“ We are still in a position where the yen is a handicap,“ Ghosn

Upside Risk

• Business and Consumer already feel better.• Virtuous cycle of reflation Asset prices → Sentiment 　→　 Real demand• Strong effect in F 2013 Fiscal Monetary Stimulus and rushing demand before the consumption tax hike• Global recovery US and China• Japan-China, Japan-Korea, cooling tension• Strong support for LDB in General Election → 　 No PM Change since 2005

Downside Risk

• Burst of Abenomics Bubble　　 Disappointment on BOJ. Fiscal Concern.・ Yen bounce back ・ Another political turmoil・ Global slowdown(or recession?)・ More tension on Japan-China, Japan-Korea・ No structural reform

Single Biggest Threat

“ the single, biggest threat to our national security is our debt.” Mike Mullen, chairman of the Joint Chiefs of Staff

→ 　 The single, biggest threat to our national security is our deflation?

Thank You !!