Almost six months after assuming office, the government of Prime Minister Shinzo Abe has delivered a spectacular turn around in the performance of the Japanese economy. This year's first quarter figures revealed that economic growth in Japan reached a vigorous yearly rate of 3.5 percent.
This result, after almost two decades of struggling against deflation and no growth, can be credited to the "three arrow" economic program, launched by Abe at the start of this year.
The program includes the following three elements. First, a "regime change" in monetary policy, including aggressive purchases of long-term government securities and aiming at a positive 2 percent inflation target. Second, government spending will increase to stimulate the economy. Third, reforms will be implemented to improve competitiveness.
Throughout this year, as a consequence, the Japanese yen has fallen almost 20 percent against the U.S. dollar, stimulating exports, while the stock market in Japan has increased more than 70 percent.
The International Monetary Fund, recognizing that these policies will boost growth in the short term, last April made an upward revision of its projection for the Japanese economy, estimating growth of 1.4 percent in 2013.
It is impossible to draw long-term conclusions from these figures, because one quarter performance does not make a trend. However, at least Japan has left behind the policies that sank its economy into deflation and no growth for the last two decades.
Isaac Cohen is an international analyst and consultant, a commentator on economic and financial issues for CNN en Espaņol TV and radio, and a former director, UNECLAC Washington Office.
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