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Abenomics: Change of plans to boost Japanese growth – Swissquote

FXStreet (Delhi) – Yann Quelenn, Market Analyst at Swissquote, notes that at a conference held at Tokyo, Shinzo Abe revealed his revised plans to boost the Japanese economy and achieve a GDP target of 600 trillion yen from the current 490 trillion yen.

Key Quotes

“He also discussed how “Abenomics” is currently entering a second stage consisting of structural reforms. To give some examples, this will include the creation of special zones where new businesses will benefit from more deregulated environments. This third arrow is coming alongside the first two “arrows” of fiscal and monetary policy. However the success of the first stage of the must still be brought into question. Indeed, inflation remains very close to zero and consumer spending is weak.”

“This third arrow does not mean that the current policies (monetary and fiscal) will be abandoned. In this regard, Kuroda says he believes that inflation is on a good trend and remains firm.”

“Yet, September’s inflation data came in weak and the country is tumbling back into deflation. The 2% inflation target won’t likely be reached any time soon and we think that monetary stimulus will be stepped up come October.”

“The current policy has now gone too far to retreat and yet not a single week passes without Japanese policymakers voicing their optimistic about the economic upturn. We remain bearish on the JPY-complex and don’t see any favorable issue, at least in the medium-term. The inflation forecast will, one way or another, be revised down.”

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