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Lessons for Europe from 'Abenomics'?

Friday, June 07, 2013 - 02:00

As Japanese Prime Minister Shinzo Abe meets with French President Francois Hollande, we examine how 'Abenomics' is working and whether austerity-weary Europe can draw any lessons from Japan's economic policies. Edward Baran reports.

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French President Francois Hollande meets with Japanese Prime Minister Shinzo Abe in Tokyo, as part of a three day state visit. It comes at an interesting time for Japan's economy, which saw the yen mark its biggest one day climb against the dollar in three years on Thursday. That highlights the fragility of Abe's aggressive fiscal and monetary policies, dubbed "Abenomics" which are aimed at reviving the country's sluggish economy by encouraging a weaker yen. Chief Currency Strategist at Bank of New York Mellon, Simon Derrick, says it's too early to call whether or not the policies are working. SOUNDBITE, Simon Derrick, currency strategist at BNY Mellon, saying (English): "There have been some signs of a positive turnaround in the Japanese economy but it's very early days. Unfortunately the by-product has been this phenomenal bubble in the stock market, this phenomenal bubble in a lot of the currency bears and of course there is the risk of fairly severe damage if they start to unwind. So my concern is moderate improvement in the economy but could damage to the financial markets actually rebound?-- I think it's a dangerous game they're playing." Hollande said that while Abenomics' priority given to growth and fighting inflation is good news for austerity-weary Europe, France would be unable to take such action to revive its own flagging economy. SOUNDBITE, French President Francois Hollande, saying (English): "We have very different situations. France is in the euro zone, and together with our partners, working together. Japan has the sovereign right to decide on its monetary policy and conditions alone." But what about Europe? Could it learn from Japan's experience? SOUNDBITE, Simon Derrick, currency strategist at BNY Mellon, saying (English): "If you were to ask whether the ECB could learn anything from Abenomics, it's possibly that they don't go trying to inflate markets. I think the potential damage that could cause to the Japanese economy should be a salutary lesson to them." As a result of the meetings between the two leaders, Japan and France have agreed to boost nuclear cooperation to secure a larger share of global atomic energy markets. Hollande returns to France on Saturday.

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Lessons for Europe from 'Abenomics'?

Friday, June 07, 2013 - 02:00