Alroy Commentary – Japan may be on the track of structural reform
What is the next step of Mr. Abe, his party got a big victory in upper house election last Sunday? In addition to U.S. economy recovery, global investors pay high attention in Japan market. Investors expressed varying degrees of optimism and skepticism that whether Abe’s government progress deeper structural reform.
After Mr. Abe has had introduced aggressive monetary easing, which was success in lifting stocks and weakening Yen, Abe unveiled “third arrow” to reform Japan economic structure. Then, victory in upper house election gives Abe more freedom to step his ambitious agenda. Political stability and abenomics previous succession make investors feel optimistic on Japan recovery, even if the next step is the toughest one. To maintain economic recovery, Japanese government has to process a deeper structural reform as below:
1. Raising competitiveness of Japanese agriculture
2. Reforming labor market to be more flexible
3. Reconfiguring industrial structure
Over six months, Abe government success in boosting economic growth and let people believe this is different. Structural reforming is the next step if they want to bring recovery to Japan from two decades of economic stagnation. We regard Japan market, at this moment, is positive, and all depending on the government’s next step.
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