We are more than 18 months into Abenomics -- Japanese Prime Minister Shinzo Abe’s set of economic policies -- and, so far, it seems to be achieving some level of success. Deflation is being replaced by inflation; profits and investments are both increasing for Japanese companies; and the Nikkei 225 is up considerably.
Credit is due to Japan's monetary stimulus for ending deflation and its fiscal stimulus for helping to start the country's economic recovery.
The so-called third arrow of Abenomics will be structural reforms, opening markets to competition and increasing female participation in the workforce.
The graphic below shows the five goals of Abe’s third arrow:
There has been no word about how the policies of Abenomics plan to deal with Japan’s demographic concerns.
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