Archibald Ciganer expects Abenomics to stay despite vow from Japan’s new Prime Minister

Archibald Ciganer expects Abenomics to stay despite vow from Japan’s new Prime Minister

Japan’s new prime minister, Fumio Kishida, has recently suggested he plans to move away from Abenomics (the nickname given to the country’s economic policies), but fund managers like Archibald Ciganer aren’t convinced anything will change. Abenomics has been foundational to Japan’s economy for over a decade at this point, which is why fund managers are so sceptical of the new prime minister’s announcement.

Abenomics has been around since 2012 and has helped bolster Japan’s economy following two decades of economic floundering. Former prime minister Shinzo Abe adopted the three ‘arrows’ of Abenomics – aggressive monetary policies, flexible fiscal policies and an embedded growth strategy. These three arrows were used as signposts to help pull Japan out of a cycle of minimal growth, wage stagnation and economic deflation.

Fumio Kishida says he wants to create a ‘virtuous economic cycle’ that will bring the rich and poor closer together by moving away from Abenomics. However, many fund managers are struggling to believe the credibility of his aims.

Archibald Ciganer is the vice president of T. Rowe Price Japan Inc. and has been a portfolio manager for the Japan Equity Strategy since 2012. His unique position has allowed him to watch the economy shift and settle over the past decade, which is why he is less than impressed with the new prime minister’s plans.

Mr Ciganer said: “We are not excited by a Kishida premiership and believe this was something of a missed opportunity to accelerate change. The power structure within the LDP is unchanged and is supportive of the Abenomics programme, which remains on track, but the pace of reform will likely be steady rather than spectacular from here.”

Moreover, Mr Ciganer feels as though Kishida is putting on a display for election engineering and political clout. He said: “We saw an example of this recently when it was reported Kishida was planning to raise capital gains tax, only for him to subsequently come out and confirm that no such changes are being considered.”

Whether Kishida’s words hold any weight remains to be seen, but in the eyes of industry experts such as Mr Ciganer, it seems that Abenomics is here to stay.

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