With Prime Minister Shinzo Abe's "Abenomics" initiative aimed at national economic recovery off to a good start, Japan's economy and its stock and currency markets started the New Year on a positive note for the first time in a long while.
The yen's exchange rate against the dollar, at the ¥79 level in October 2012, topped ¥104 and the Tokyo stock market's Nikkei average neared the psychologically vital ¥16,000 by the yearend, up from ¥8,290 in October 2012. The country's production and exports both gathered recovery momentum, having registered growth for four consecutive quarters since the fourth quarter of 2012. Corporate earnings turned upward and investment drives grew.
For the Abenomics project to be called a real success, however, it is necessary for workers' incomes to rise as well and business enterprises' equipment investment to get on a track of expansion on their own without causing runaway inflation and interest run-up. But although it is important to achieve these things, a number of destabilizing factors loom into view.