A year has passed since Japanese Prime Minister Shinzo Abe came forward with the throbbing drumbeat of so-called Abenomics. His hard-line Cabinet wholeheartedly pressed ahead with a limitless quantitative easing and devaluation of the yen to fight a two decade-old recession. In a year, it has become clear that Abenomics was only a half success. Since he took the bold economic initiative a year ago, the Nikkei index has risen by more than 50 percent, and the yen is weakened to the point of 100 yen ($0.96) per U.S. dollar.
But the Japanese government’s aggressive intervention in the market has brought about unwanted side effects as well. The balance of the current account - the difference between a nation’s income and expenditures - has gone into the red, while the growth rate for wages and capital investments in plants and equipment failed to meet Tokyo’s expectations. Some economists are worried that the magic power of Abenomics has petered out in the meager economic growth of the third quarter - 0.3 percent lower than the figure in the same period a year ago. Moreover, the introduction of a consumption tax next April may well end up slamming shut the pocketbooks of consumers who were just getting ready to spend.
Despite such downsides, Abenomics helped spread a “can do” spirit among the woebegone economic players of Japan. Without Abenomics, its economy might have hit rock bottom. Fortunately, the Korean economy has managed to withstand the ramifications of Abenomics. Of course, cars, steel and the chemical industries are in fierce competition with their Japanese rivals, and they suffered damage due to the strengthened price competitiveness from a weaker yen. The devalued yen has also led to a noticeable decrease in Japanese tourists to Korea.
Yet Abenomics’ real impact on our economy fell short of our worries thanks to the robust increase in our companies’ non-price competitiveness in such industries as smartphones and automobiles, and to their overseas production capacities. As a result, our current account balance is expected to register its largest-ever $63 billion surplus.
We need to take note of the Japanese government and politicians’ roles in Abenomics. The political leadership has helped to turn around economic players’ deep-seated defeatist mentality through bold prescriptions based on a resolution to print money madly.
Compared to the determination of Japan, we face the plight of a long list of bills aimed at revitalizing our economy, which are still pending at the National Assembly due to lawmakers’ wrangles and squabbles over outdated ideological issues. It would be utterly naive - and preposterous - if they continue to wish for a miraculous economic recovery after discouraging our economic players’ investment and consumption plans. Instead of a knee-jerk resentment of the public labeling them “second-class politicians,” maybe they should learn about proactivity from their counterparts in Japan.