Aug 5 (Reuters) – Companies and consumers alike are
declining to play their assigned roles in Abenomics, undermining
Japan’s chances of escaping deflation and economic malaise.
With exports falling, despite a cheap yen, and inflation
sagging again, pressure will be on the Bank of Japan, which
concludes a two-day policy meeting on Friday.
Thus far Abenomics, a mix of extraordinary monetary policy,
fiscal stimulus and longer-term structural reforms, has met with
some early successes, driving inflation and growth higher. But
households, crimped by the failure of income to keep pace with
inflation, are not spending as hoped, as demonstrated by
disappointing June retail sales data released last week, which
showed a year-on-year fall.
That’s in large part due to an April increase in a
consumption tax from 5 to 8 percent, itself an attempt to get
out in front of Japan’s rather dire long-term debt and tax
It is hard to be surprised by Japanese consumers assuming a
defensive crouch, habituated as they are to year after decade of
tough economic times.