Wobbly Abenomics
Another Stimulus in Japan?

Less than a week after Prime Minister Shinzo Abe seemed to be moving toward more medium-term and longterm-minded economic reforms, one of Abenomics’s chief architects says Japan needs more stimulus. The Financial Times reports that advisor Etsuro Honda has called more stimulus an “urgent task.” The analysis comes amid widespread concerns that Japan may be sliding into recession. Honda himself told the FT that “I don’t think we should call it a technical recession yet, but generally speaking, the Japanese economy is in a static situation. It is not growing positively.” More, via the WSJ:

Output of goods, ranging from boilers and excavators to cars and cosmetics, fell 0.5% in August from the previous month, following a decline of 0.8% in July, according to government data released Wednesday.

The figure sharply undershot a consensus forecast for a 1.0% increase, prompting the ministry to downgrade its assessment of output to “trending on a weak note” from “trending with ups and downs.” […]

“Japan’s recovery has ground to a halt,” said Marcel Thieliant, economist at Capital Economics. The latest output data suggests “Japan’s economy shrank yet again in the quarter that ends today. Additional easing by the Bank of Japan next month looks all but inevitable,” he added.

Moreover, last Thursday Abe declared an end to deflation just hours before the publication of reports finding that deflation had in fact returned.

Abe has acknowledged current economic difficulties, and has put forward new proposals to boost the country’s economy. But his biggest proposals focus on more structural issues like the low birth rate and the fast-growing elderly population, and if Honda and others are right Abe should be (and perhaps is) more concerned about the immediate future.

Meanwhile, while Japan’s leaders might be discussing another stimulus, Reuters reports that Indonesia’s have gone ahead and announced one:

In a live television broadcast, [President Joko] Widodo announced a series of measures to attract investment, such as streamlining dozens of overlapping trade and industry regulations, simplifying the permission process for “strategic projects”, and easing rules for foreigners opening bank accounts in foreign currency.

These are just the early responses to a Chinese slowdown that Asian leaders, like many traditional investors, seem to believe shows few signs of abating.

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