Turning Japanese (Part 4)

Where is Japan going?

To answer that question, you have to know where Abenomics is going. Economists around the world have been supportive of Mr. Abe and his “three arrows”—easy monetary policy, fiscal stimulus, and structural reforms. The theory is that the first two can promote growth in the short run, which will provide political cover for the third: changes in labor laws and other regulations that can promote private sector investment-led growth.

Because to return to stable, solid growth Japan’s economy must become more flexible and competitive. Government restrictions, anticompetitive laws, bureaucratic interference, and relatively high taxes all impede growth and make it difficult to do business. Indeed, Japan was ranked 24th out of 185 nations on doingbusiness.org; the US is ranked 4th. Starting a business is especially hard; Japan is ranked 113th in that area, behind Ghana and Tanzanea.

For Japan to turn around, they need to remove the protectionist, crony controls that have grown up over the past 20 years. The reforms will take some time to have an impact. Let’s hope that Japan’s people can wait that long.

Douglas R. Tengdin, CFA

Chief Investment Officer

By | 2017-07-17T12:34:39+00:00 June 21st, 2013|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. –
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