Abenomics

Abenomics refer to economic policies set forth by prime minister Shinzo Abe in 2012, that were intended to reinflate Japan’s stagnant economy and improve its position in the global economic system. Abenomic policies form the foundation of modern Japanese economic policy.

The Bank of Japan implements Abenomics via three methods: printing yen; increasing government spending to 60-70 trillion in bonds a year; and creating new regulations that garner support from the private sector. Abenomic policies were designed to help the Bank influence economic activities and achieve its 2% annual interest rate target.

In 2016, the Bank of Japan was one of the few central banks with a negative short-term interest rates, meaning they would pay other countries to finance their debt. Today, Japan still struggles to stimulate its economy or attract foreign investors, particularly because its aging population and reduced labor force reduce its capacity for Gross Domestic Production (GDP).