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Zombie Abenomics

Japan's Missing Economic Revival

A foreign exchange trading company in Tokyo, November 12, 2014. Toru Hanai / Courtesy Reuters

Japanese Prime Minister Shinzo Abe’s economic revival is hardly going as planned. A consumption tax hike that he introduced in April triggered a recession over the following six months, prompting him to announce the delay of the second hike, from October 2015 to April 2017. In his November 18 press conference, he also vowed to make no further postponements, to dissolve the Japanese parliament, and to hold a snap election to gain a mandate for his economic plan.

The tax delay is unquestionably necessary. Before the first hike, the Ministry of Finance and the Bank of Japan had blithely promised Abe that Japan would see only a mild and short-lived response, which proved disastrously wrong. Just as wrong were their warnings that any delay in the second hike would cause stock prices to crash and interest rates to spike. In reality, the first sign of a possible delay sent stock prices to

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