Lessons from Abenomics

Bank of Japan Gov. Haruhiko Kuroda declared that the country has finally shaken out of the deflation that plagued the world’s third largest economy for two decades, although inflation is still far from its target of two percent. He assured that the fundamentals were strong, and data backs his conviction. Corporate profitability has risen sharply, and there are more jobs than jobseekers.

The driver primarily comes from the corporate sector. Top companies recorded their best-ever net profits in 2017 for the second year. Among listed companies, 69 percent reported higher bottom-line figures. The unemployment rate is nearly perfect with 2.4 percent in January. Consumption picked up and consumer prices gained for the 13th straight month. The fourth quarter of 2017 was the eighth consecutive quarter of economic growth.

The lethargic corporate sector has gained vitality. Through image sensors that are a vital component in internet-of-things and artificial intelligence-powered products, Sony delivered its best performance in its 70-year corporate history in 2017. Panasonic and Hitachi have reinvented themselves with new growth and rigorous restructuring.

Prime Minister Shinzo Abe’s multiple economic packages of monetary and fiscal stimuli and structural reforms, dubbed Abenomics, that started off in late 2012 has paid off. Abenomics had the primary goal of exiting from a deflationary cycle and was pressed ahead until Japan finally combated the curse. The Korean economy is also weighed down by lethargy. Due to job scarcity, real youth unemployment rate has hit 23 percent. Structural reforms accompanied by stimuli are essential to bringing life back to Korea Inc.