Abenomics: Time to Rethink the Three Arrows?


This is a listing of older East-West Center events (newer listed first).  See Events to get the list of current or upcoming events.

When: Nov 19 2014 - 3:30pm until Nov 19 2014 - 5:00pm
Where: 1819 L St, NW, Washington, DC. Sixth Floor Conference Room

Abenomics: Time to Rethink the Three Arrows?

An Asia Pacific Political Economy and Trade Seminar featuring:

Mr. Hiroaki Kuwajima
Chief Financial Officer,
Aoyama Shachu Corporation (ASC)

Abenomics: Time to Rethink the Three Arrows? from East-West Center on Vimeo.

Mr. Hiroaki Kuwajima outlines the basic tenants of "Abenomics."

Since his administration began in 2012, Japanese Prime Minister Abe has seemed to successfully manage the Japanese economy through a thoroughly crafted economic policy called “Abenomics.” However, “Abenomics” is now facing a strong headwind because of unexpected economic trends –rising deflationary pressure, sluggish export growth and stagnating real wage increases, especially after the consumption tax increase implemented in April 2014. With the deadline of deciding whether or not to implement a second consumption tax increase in December 2014 fast approaching, “Abenomics” is facing s critical challenges including the selection of one set of controversial economic policies over another.

In this seminar, Mr. Hiroaki Kuwajima discussed the current domestic political debate regarding the set of upcoming economic policy choices and the broader political/economic implications of the policy decisions expected to be finalized this December. He began with a brief overview of "Abenomics." The push for "Abenomics" arose as a counter to the "six pains" that Japan was undergoing at the time: deflation, currency appreciation, slow progress on free trade negotiations, high electricity costs, high corporate taxes and strict labor regulations. From this came the "three arrows." The first arrow would deal with aggressive monetary easing, the second with fiscal stimulus, and the third with promoting investment. 

Combating deflation has been "Abenomics'" main priority from the get-go and looking at how inflation has appeared to rise since Abe took office one would think that this gaol was nearing completion. According to Mr. Kuwajima, however, this is not the case. The rise of inflation has been in large part due to the high energy prices that Japan has combatted with, particularly after it shut down its nuclear power plants. Furthermore, while the Bank of Japan has been buying back huge amounts of money stocks, that has not contributed to an equally high proportion of lending; instead, lending has remained relatively flat. Another phenomenon that Abe's LDP party has touted is the decreasing unemployment rate in Japan. In fact, the not only had the unemployment rate been going down since before Abe took office but also the potential that Japan will face a labor shortage due to demographic challenges is an ever-increasing reality. Exports too remain stagnant as Japanese businesses, particularly the auto industry, continue to offshore production while at the same time call for currency depreciation. 

In short, Mr. Kuwajima argued that all of these phenomena pointed to the third arrow losing political capital while the magic phrase "ending deflation" has been used as a means to prevent any actual, necessary reforms within Japan. 

 For more images, please visit the album for this event on the East-West Center's Flickr page. 

Hiroaki Kuwajima is the Chief Financial Officer of the Aoyama Shachu Corporation (ASC). ASC is a the Japanese think tank and consultancy, providing policy analysis and advisory services to both the Japanese political parties and corporate clients in Japan. At ASC, Mr. Kuwajima specializes in the Japanese political economy and the Japanese business-government dynamics. In this regard, Mr. Kuwajima has spoken and published articles through think-tanks such as Carnegie Endowment for the International Peace, Carnegie-Tsinghua Center for Global Policy, East-West Center, or China Center for Contemporary World Studies. Mr. Kuwajima was nominated as Eisenhower Fellow(Japan delegate 2014, Multi Nation Program) from Eisenhower Fellowships, where he focused on the role of business in policy making in the United States both at the national level and state level. He is also a lecturer in the full-time MBA program at Globis University, the largest private business school in Japan. He holds Bachelors in Economics from the University of Tokyo, and MBA and MPA from Harvard University.

Primary Contact Info:
Name: Sarah Batiuk
Phone: 202-327-9735