Japan – false hope

Japan’s deteriorating trade deficit exposes one of the biggest problems with Abenomics. It places too much weight on the Bank of Japan to do the heavy lifting while the structural reforms that hold the key to unlocking productivity and growth are continually delayed and diluted. Further yen weakness seems to be the target to keep the wheels rolling, but it will do little for the economy. If anything it would be a further tax on consumption and real incomes. But the distortions Abenomics has created mean a further FX adjustment is pending.

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