Abe's Reforms and Implications for Investors
2015 Executive Seminar
INTRODUCTION
The 2015 Pacific Pension & Investment Institute (PPI) Executive Seminar was held as Japan was at an inflection point of its position on the global stage. Prime Minister Shinzo Abe spent the summer battling to pass unpopular national security legislation, which he was eventually able to do, thus enabling Japan’s armed forces to participate in collective defense operations with its allies. With the original quiver producing mixed results, Abe also announced the so-called “three new arrows”; a reaffirmation of his dedication to monetary, fiscal, and structural reforms to Japan’s floundering economy. Accordingly, Abe vowed a shift in focus away from the security issues that dominated much of 2015 and pledged once again to address lagging economic growth, positioning it as a focal point for the July 2016 election campaign.
Against this backdrop many speakers at the Executive Seminar voiced “cautious optimism” for Japan’s revitalization. To many, the new arrows represent an overdue recognition of the serious, long- term challenges facing Japan, chief among them a demographic deficit that is seriously impeding current and future growth prospects. These new arrows emphasize efficient use of human capital to combat declining productivity. Additionally, Abe called for greater support for families with children to encourage more citizens to marry and to start families. Lastly, the new arrows called for expansion of the social welfare system, including creation of more elderly care facilities.
While many speakers supported the structural reforms, they lamented that there was little that was new in the revised arrow package. While they were intended to place greater emphasis on the underlying issues facing Japan, many seminar participants wondered aloud whether “‘Abenomics’ has missed the mark.”