How much will Abe’s shooting death hurt Japan’s economy?
On the morning of July 8, Mr Abe collapsed while giving a speech in the Japanese city of Nara. There were signs of bleeding and what appeared to be gunshots. Japanese media quoted local fire department sources as saying Abe’s cardiorespiratory function had stopped when he was rushed to the hospital. Later in the day, local media reported that Abe died at the age of 67. After this incident, Japanese Prime Minister Fumio Kishida ended his speech for the upper house election ahead of schedule and made a speech about the shooting, expressing strong condemnation. Fumio Kishida held a press conference at the prime minister’s official residence in Tokyo at around 19:00 on the same day, expressing condolences over the shooting death of former Prime Minister Shinzo Abe and strongly condemning the violent acts of the attackers. Mr Kishida said the campaign would “go ahead as planned”. How much impact will this shooting have on Japan’s economy as it draws global attention? Zhang Jifeng, deputy director of the Institute of Japanese Studies at the Chinese Academy of Social Sciences, said in an interview with Finance Union that the shooting incident had little impact on Japan’s economy. “Abenomics” is becoming less and less influential in Japan, and Kishida’s policy after taking office is very clear, which is to break with Abe’s policy. But the short-term policy is very much like Abe’s because, in the special context of the epidemic, Japan needs an aggressive monetary policy to stimulate the economy.
Within 30 minutes of the event, the Nikkei 225 index plunged from above 26,820 to near 26,480, a drop of nearly 400 points, after rising more than 0.8% at one point. By the close, the Nikkei 225 index was up 0.1% at 26,517.19. [1]
Will the shooting death of Mr Abe, a two-time prime minister and the longest-serving leader in Japan’s constitutional history, have any impact on the economy?
“Abe is a former prime minister, not a sitting prime minister, not the president of the LIBERAL Democratic Party, and the sudden death of him will have very little impact on the Japanese economy.” Zhang Jifeng said that “Abenomics” is becoming less and less influential in Japan, and Fumio Kishida’s policy after taking office is very clear, which is to break with Abe’s policy. “But the short-term policy is very Much like Abenomics because, in the special context of the epidemic, an aggressive monetary policy is needed to stimulate the economy.”
According to Zhang, “Abenomics” is a series of economic stimulus policies accelerated by Abe after he became prime minister for the second time in late 2012. The main contents can be summarized as “the old three arrows” and “the new three arrows” — “the old three arrows” are flexible fiscal policy, bold monetary policy and stimulating private investment, The “new three arrows” are more focused on development goals such as improving living standards, with nominal GDP reaching ¥600 trillion and a fertility rate of 1.8.
According to Zhang, “Abenomics” has led To Japan’s second-longest post-war economic boom of 73 months, with the economy expanding, the stock market rising and the unemployment rate falling. However, many economic indicators set by “Abenomics” have not been realized, and the long-term implementation of proactive fiscal policy has led to an increasingly serious financial crisis in Japan, which has led to a series of economic problems. Japan’s GDP shrank 21% from $6.2 trillion in 2012 to $4.9 trillion in 2021, according to public information.
It is also worth noting that after the implementation of a series of policies of “Abenomics”, the depreciation of the yen exchange rate began to accelerate. “There are complex deep and practical reasons for the ‘Abenomics’ policy implemented during the Abe administration, which ultimately led to the devaluation of the yen. But a weaker yen is a double-edged sword for Japan’s economy, helping exporters by making their goods cheaper. On the other hand, there is a lot of damage to importers, and Japan is a very import-dependent country, and that is ultimately passed on to the public.”
“Abenomics has received mixed reviews from the international community as well as the Japanese people. “Zhang said.
At the moment, Japan’s economy is suffering from the thorny problems of rising prices and a weakening yen. Japan’s core consumer price index (CPI) rose 2.1 per cent year on year in May, according to the Statistics Bureau of The Ministry of Internal Affairs and Communications. The national CPI annual rate stood at 2.5 per cent, both unchanged and above the Bank of Japan’s 2 per cent target for the second consecutive month.
Inflation at 2.5 per cent is the highest in Japan since 2015. The recent Japanese economy is relatively difficult, the current most intractable problem is rising prices and the devaluation of the yen. “Japan’s inflation problem is mainly imported inflation, unhealthy inflation. On the other hand, the depreciation of the yen has also contributed to imported inflation. The price of imported Japanese products is rising in Japan due to the Russia-Ukraine war, as well as the rise of international crude oil, gas and bulk commodities, and the depreciation of the yen.
Zhang also pointed out that since the outbreak of the Russia-Ukraine war, the Japanese economy has had a more significant impact. “The Japanese economy is not expected to be too optimistic in the next one or two years due to weak external demand and weak domestic demand. The government had previously forecast real gross domestic product growth of 3.2% in 2022, excluding price changes, and nominal GDP growth of 3.6%. But given the current situation, it would be good if the growth rate could reach half of the original plan. “Zhang said.
Japanese stocks plunged in the afternoon the case shook the Bank of Japan’s easing policy support?
Immediately after the shooting, the shock was felt in Japan’s financial markets.
Japanese currency markets were also hit by events. After the assassination, the yen surged to 136 against the dollar before easing its gains. The yen was down 0.06% against the dollar at 135.89 as of 7:20 p.m.
Yen’s brief rebound caused concern. Since the beginning of this year, the yen has been on a downward trend, and the effect of the devaluation even spread to other Asian currencies.
Research associate professor at the Chinese Academy of Social Sciences institute of Japanese economy field is a 21st-century economic report reporter interview, said the yen short phenomenon with Shinzo Abe, has long argued that loose monetary policy impact on, “Mr Abe” Abe economics “on the implementation of loose monetary policy implementation, and in Japan’s central bank governor, under the control of Mr Kuroda, The yen and interest rates on JGBS has remained low. Even if the bond market wobbled, the boj quickly brought it under control. Abe’s shooting will have a certain impact on the Bank of Japan’s monetary policy.”
Indeed, Bank of Japan Governor Haruhiko Kuroda immediately expressed his “deepest condolences” and “heartfelt thanks to Abe for his contribution to the economy.”
Mr Tanmasa added that with Mr Abe’s death, expectations of a rate hike by the Bank of Japan would be stronger and Japanese stocks would fall.
During his term in office, Abe has implemented Abenomics, a combination of monetary, fiscal and structural policies, and pushed the yen down through monetary easing to boost Japan’s export growth and combat stubborn deflation. As Abe is a major supporter of the bank of Japan Governor Haruhiko Kuroda’s ultra-loose policy, the shooting incident could affect support for the monetary policy.
By Zhiyuan Tan
