Impact of Abenomics
Kyoko Fujita, NHK WORLD
The economic policies of Prime Minister Shinzo Abe - dubbed Abenomics - have had a big impact on Japan. The value of the yen has plunged against other currencies, and the stock market has surged.
Since Abe took office at the end of 2012, the yen has weakened 40 percent against the dollar. This has boosted the competitiveness of goods sold overseas by Japanese exporters.
Toyota Motor has enjoyed a surge in sales and record operating profits. "The yen weakened more than we expected," says Nobuyori Kodaira, an executive at the automaker.
Bank of Japan policymakers share part of the credit. Abe looked to them to help drag the country out of deflation. The BOJ's policy of flooding the market with cash led directly to the weakening of the yen and the rise in the stock market.
Some analysts agree that the depreciation of the Japanese currency has been good for the economy.
"Consumer and corporate sentiment have really improved," says Kengo Suzuki, the chief foreign exchange strategist at Mizuho Securities. "And Japan is starting to emerge from deflation. If we look back over the past 20 years, I think we can say Abenomics has delivered positive results."
Others, however, take a different view.
The operators of Datehaki, a shoe company in northern Japan, say the weak yen is hurting their business. The company imports about half its products from Asia. Executives say they're now paying 30 percent more for these items compared to 2012.
Even though they cut costs in other areas, company officials still had no choice but to raise some of their prices. They say that's caused sales to tumble by 10 percent compared to last year.
"If the price of imported goods goes up, then surely our sales will gradually decline," says Datehaki president Makoto Mori.
Staff at Seiken, food and beverage producer in a rural area of northern Japan, are also worried.
The company employs about 30 workers to make apple juice. The weaker yen has made imported oil more expensive, driving up packaging and shipping costs by about 7 percent in the past year alone.
But executives are mindful of consumers spending less. So they decided not to raise prices. Now, they're expecting profits to slump by 40 percent.
"Abenomics helps big companies," says Seiken president Yusho Takeya. "It doesn't do much for smaller businesses in rural areas like us."
Some economists point out it may take time for the effect of Abenomics to percolate through the economy. They say larger firms could help the process along.
"Companies that have done well due to the weaker yen should take the initiative to increase capital investment, employ more workers, and raise wages," says Shinichiro Kobayashi of Mitsubishi UFJ Research and Consulting. "That will spread the benefits around among all people."
Abenomics has resulted in a windfall for some of Japan's largest companies. The challenge now is to make sure others enjoy the benefits of Abe's economic plan.