The second arrow of Shinzo Abe's "Abenomics" went into effect during the second quarter of 2014. Hoping to escalate government tax revenue, Japan raised the consumption tax rate from 5% to 8%. Business investment, however, declined 5.1%, and private residential spending declined 10.4% during the quarter, resulting in a net decline in GDP of 7.1% versus the prior year.
In fairness, Japanese consumers likely splurged a bit in the first quarter in anticipation of the coming tax increase, so some time is needed to assess the long-term ramifications. Nevertheless, the performance of Japan's economy right now is troubling and needs to show marked improvement quarter by quarter for Abenomics to be declared a success.
We asked CFA Institute Financial NewsBrief readers to share their views on the performance of Abenomics thus far.
Which of the following statements best reflects your views concerning "Abenomics" in Japan?
According to 613 respondents, 58% believe it's too early to judge its performance, whereas a quarter of respondents believe it's a failure. Only 7% think Abenomics has succeeded, and 11% said they don't know.
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