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Home > Country Profiles > Japan

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Financial Outlook

The government of Prime Minister Shinzo Abe, which took power at the end of 2012, implemented a series of radical economic reforms in 2013 designed to kickstart the economy after two decades of stagnation and deflation. The policies involved heavy government spending, aggressive central bank monetary easing, and structural reforms. In April 2013 the central bank launched a massive ¥60–70 trillion a year stimulus in a bid to double the country’s money supply and increase inflation to a 2% target within two years. The move sent the yen to a five-year low against the US dollar, boosting exports and causing a stock market boom. Inflation has also started to rise, accelerating in December 2013 at its fastest pace since 2008. Prices rose by 1.2%, bringing inflation toward the authorities’ target of 2%. The government is also keen to stimulate a pickup in corporate spending, and by 2014 there were signs that this was occurring. However, there are concerns that an increase in the sales tax to 8%, from 5% in April 2013, could weigh on the economy.

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Further reading on Japan

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