Japan's battle with pandemic may mark end of Prime Minister Shinzo Abe's fiscal experiment by LeikaKihara Tetsushi Kajimoto
TOKYO - The huge cost of the coronavirus pandemic is upending Japan’s seven-year experiment to rescue the economy from its debt timebomb, as recession fears prompt calls for “helicopter money” - unlimited spending bankrolled by the central bank.
But even as global governments and central banks pull out all the stops to reduce the economic fallout, Japan is a grim reminder that a debt timebomb may be inescapable. “Abenomics has kept the economy in good shape for quite a long time,” said former Bank of Japan board member Takahide Kiuchi, pointing to Abe’s stimulus policies, launched in late 2012 to pull the country out of deflation.
Growth and inflation did perk up, but the time bought by the BOJ’s aggressive stimulus was not spent wisely. But what was intended to be a quick fix to beat deflation turned into a long-term battle, resulting in an unprecedented policy in which the BOJ has pledged to cap long-term interest rates at zero.
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