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By Vishal Mansukhani
The Japanese economy is expected to undergo a series of changes in the coming years. Prime Minister, Shinzo Abe, has laid out aspiring targets to boost the economy in an attempt to regain status as the second largest economy in the world after being squeezed into third by China back in 2011. Abe’s plan revolves around the “Three arrows,” which include both monetary and fiscal policies, forecast the nation’s gross domestic product to rise an annualized 3.5%. Abe has moved past his weak political power that he experienced during his inglorious first term in office to put Japan on a regime of “Abenomics” which demonstrates how increased government spending and alternative methods of reflation can jolt the economy out of a prolonged deficit of nearly twenty years. The growth spurt anticipates the rise of private consumption, net exports and public spending ultimately driving the success of Japan’s economic revival.
When Shinzo Abe was reelected for prime minister in December 2012, he declared to bring about a programme of geopolitical rebranding and constitutional change. Of this declaration we now have the “Three Arrows,” which originally refers to an old legend from Yamaguchi, the hometown of Abe, where a lord asks his three sons to each snap an arrow, and everyone easily did. He then told them to snap three arrows all at one, and none of them could do it. The moral of the legend is that it is important to work together for the good of the clan and that was exactly what Abe is attempting to do.
The first of the three arrows focuses on the monetary policy which aims to rid the nation from 15-years of deflation and promote an inflation rate of 2%. Abe started by initiating a hostile takeover of the central bank of Japan and appointed former governor Haruhiko Kuroda as the president so that the fluctuation in prices can be stabilized. This reflected in the yen increase in value over time when last fall 2012, it cost 77 yen for a dollar whereas in 2013, it costs just about 101 yen. This depreciation in the yen currency will make exported goods from Japan to be cheaper and will stir the foreign markets to purchase more Japanese products.
The second arrow is fiscal policy where the increase in government spending looks to reduce the blowout deficit in order to remove the threat of deflation. Thus, Abe has decided to splurge on additional government spending of approximately 10.3 trillion yen, which is equal to about $116 billion USD. Naoki Iizuka, an economist at Citigroup Inc. in Tokyo noted that “Japan is clearly back from stagnation and the key is to unveil a strong public growth strategy.” This is clearly a bold move for Japan as the influx of investments is forecasted to add 600,000 jobs and while providing funds for disaster mitigation projects, public works, and subsidies for companies that invest in new technology and financial aid to small businesses.
With increased spending and inflation expectations to rise, standard economic principals predict room for growth in the short run; however the export market will have to pick up exponential growth to ensure continued long term sustainability. Here we find the third arrow of Abe’s plan: the growth policy. This program consists of reforms designed to achieve long term growth by stimulating private investment and invigorating the supply side of the economy. This will increase the exports market and maximize productivity. The seriousness of Abe’s third reform was characterized by the recent approval of Japan to join the Trans-Pacific PartnershipThis free trade agreement, along with 11 other members including the United States, Singapore and Australia, will cover 40 percent of global economic output and one-third of all world trade. This will significantly boost export trade as it signals a pathway toward a Free Trade Area of the Asia Pacific. Establishing strong and global trade ties with many other nations will remove all tariffs by the year 2015 and appease technical barriers to trade.
The goals identified through the TPP also include doubling farm incomes to 1 trillion yen, increasing tourism and value of transports, and stimulating power generation exports. Farming, consisting mainly of rice and wheat farms, has become the main priority of Abe’s reform due to the heavy lobbying enjoyed by farmers. By removing sky-high tariffs and land laws limiting the size of farm plots, young entrepreneurs should be attracted to this industry which will drive an increase in domestic food processing and restaurant supply as well. Another sector that is being targeted is the medical care industry; specifically through the sale of prescription drugs through the internet. Lastly, Abe is looking to focus on the energy market, which has taken a devastating hit due to the Fukushima nuclear incident in March 2011. Abe’s interests lie in the renewable energy market, encouraging competition and in turn increasing domestic supply.
All in all, supporters of Abenomics have shown that a change in perception of economic standing has thus far resulted in tangible change. There is hope that Japanese companies will continue to see increased profits, which will result in increases in wages, which will ideally boost overall consumption, leading to renewed investments and back again to increased profits. The resulting cycle will effectively secure long term gains for Japan.
| Product Model | Inside Diameter | Outside Diameter | Thickness |
| LBHT50A bearing | 50 | 75 | 100 |
| LBHT40A bearing | 40 | 62 | 80 |