Title: Why is Japan's economy shrinking? | World Economic Forum
Headings: Why is Japan's economy shrinking?
Why is Japan's economy shrinking?
What’s the problem?
What’s causing it?
What is Abenomics?
What does that look like in reality?
So what happens next?
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Content: The basic aim is to get money flowing again and increase spending and consumption. Another core aim of Abenomics has been to boost exports by lowering the value of the yen. Between 2012, when Prime Minister Abe began this term in office, and 2014 the value of the currency was driven down from around 80 yen to the dollar to 120 yen to the dollar. But the yen has been getting stronger again. In the last two weeks it has gone up from 120 yen to the dollar, to 112 yen to the dollar. That prompted the central bank to push interest rates below zero for the first time ever in an effort to discourage people from buying into yen as a ‘safe haven’. It also hoped that domestic corporations and consumers would be prompted to spend rather than save. So what happens next? Volatility on the Japanese stock market, negative interest rates and now worse than expected GDP figures all serve to pile the pressure on Prime Minister Abe and the viability of his Abenomics programme. Some of the economic gains made since Mr Abe came to power in 2012 have now been reversed and even before the size of the latest economic contraction was known, there was speculation that Abenomics was failing.