Why the three arrows of Abenomics are primed for success

Confidence in the Abe administration

Abenomics has no shortage of critics and sceptics, but upon closer inspection, we believe Japan's economy is moving in the right direction.

Prime Minister Abe's set of policies aimed at overcoming deflation in Japan consists of three arrows: monetary, fiscal and growth strategy. When analysing each on a case-by-case basis, we find that desirable outcomes are beginning to come through.  Starting with the first arrow, monetary policy, while some say that inflation remains well below the Bank of Japan's 2% target, we see encouraging signs. Core-core inflation, which excludes food and energy prices, has been positive for the past few years. Headline inflation, while low, also looks set to rise gradually. Some of the bigges...