Abenomics: How Shinzo Abe's Policies Changed The Course Of Japanese Economy

Shinzo Abe, Japan’s longest-serving prime minister, who turned around the Japanese economy from recession, died after being shot at during a campaign speech in the city of Nara on Friday. He was rushed to a hospital but died of blood loss. Abe was pronounced dead on Friday afternoon, the hospital treating him confirmed. 

The 67-year-old conservative leader advocated what came to be popularly known as Abenomics. Abe’s policies revived Japan’s economy out of deflation and challenged China’s growing geo-political clout by beefing up Japan's military through his historic two-term tenure. 

Abe was prime minister of Japan from 2006 to 2007 and then again for a second stint from 2012 to 2020. He had been a strong proponent of a closer strategic partnership between India and Japan and India-Japan ties witnessed a major upswing during Abe’s second term in the top office. 

What Is Abenomics?

The economic policies put in place for Japan by Abe when he came to power for the second time in 2012, became popularly known as Abenomics.

His economic policies involved increasing the country’s supply of money, making Japan more competitive through widespread reforms, and increasing government spending. The Economist defined the policies as a "mix of reflation, government spending, and a growth strategy designed to jolt the economy out of suspended animation that has gripped it for more than two decades." 

Abe, a conservative lawmaker, had resigned abruptly in 2007 as prime minister, just one year after serving as the premier. He came back to power in 2012 for a second term by pledging to boost the stagnant Japanese economy.  

Abenomics included aggressive policies catering to the fiscal and monetary situation of the country. It involved increasing fiscal and monetary stimulus through government spending. Unconventional central bank policy was another peculiar aspect of Abenomics. It included providing negative short-term interest rates that made borrowing and spending cheaper for companies as well as consumers.  

How Did He Reshape Japan? 

Abe took charge first as the premier of Japan in 2006. He was Japan's youngest prime minister since World War Two. But he presided over a year marked by voter outrage over lost pension records, political scandals, and an election that resulted in the drubbing of the ruling party, forcing Abe to quit citing ill health. 

Five years after resigning, he led back his conservative Liberal Democratic Party (LDP) - ousted in 2009 - to power. In November 2019 he became Japan's longest-serving prime minister. But public support faded by the summer of 2020 because of his handling of the Covid-19 outbreak and several scandals, which included the arrest of his former justice minister.

In 2019, his growth strategy suffered due to an increase in sales tax as well as the Sino-US trade war. But the Covid-19 pandemic in 2020 triggered Japan's biggest-ever economic slump. Abe was heavily criticised for being slow in sealing Japan's borders once the pandemic broke out, failing to put Japan in a state of emergency by making people stay at home, and shutting down public spaces and shops. His response to the pandemic was initially criticised as clumsy and he was later accused of not showing leadership.

His economic vision included reforms that helped to increase women’s participation in the workforce. At a time when Europe and the US grew more and more hostile towards migrants, Abe’s policies were focused on allowing more migrants in order to ease labour pressures and thereby aiding growth. 

On the geo-political front, in order to counter China, Abe increased defence spending and formed meaningful associations with other Asian countries. He reformed laws to allow Japan to exercise the right to militarily aid an ally under attack. His stance on defence and foreign policy was hawkish and he toiled to change Japan's pacifist post-war constitution.’ 

Abe’s nationalist views had often been a source of worry for South Korea and China, especially his 2013 visit to Tokyo's Yasukuni shrine which is known as a controversial site that was a reminder of Japan's troubled past of militarism before and during World War II. 

Abe was also credited for holding together the Trans-Pacific Partnership, an important and monumental trade agreement between 11 countries after US’ abrupt withdrawal under Donald Trump's administration.