Prime Minister Shinzo Abe of Japan has focused his national revival agenda on two main things: defense and the economy. There can be little doubt that he is moving the country away from its pacifist past and toward a better organized defense leadership and stronger military. The impact of “Abenomics,” his economic strategy, is less clear: many analysts and investors have been disappointed; others have celebrated renewed growth or suggested the reforms will make a big impact in the future.Government data released today suggest at least some of Abe’s economic reforms are having a positive effect, the FT reports.
Orders of new machinery by businesses, considered a leading indicator of overall capital investment, surged to a five-year high in November, rising 9.3 per cent to Y882.6bn. The year-on-year increase, which handily beat analysts’ expectations, was the second in two months and the fifth biggest on record.Business investment has been a missing element in Prime Minister Shinzo Abe’s year-old effort to stimulate the Japanese economy. Mr Abe has ramped up government spending while the Bank of Japan has massively loosened monetary policy, but private companies – possibly concerned that the state-driven surge in demand will be temporary – have been cautious about expanding their production capacity….The machinery orders report excludes the volatile shipping and electric power sectors, but it is still prone to sizeable month-to-month fluctuations. Even so, Marcel Thieliant, an analyst at Capital Economics, said Thursday’s data nonetheless “point to a renewed recovery in business investment”.
This is a good sign that Abenomics is helping to boost the Japanese economy out of years of lethargy. And the economy is arguably more important (and a more popular issue in Japan) for Abe’s national revival campaign than rebuilding the Defense Forces. If Abenomics works, big changes are coming to Asia.