- Hideo Kumano, chief economist at Dai-ichi Life Research Institute
Amid rising skepticism about Japan's rescue programme, the nation's Prime Minister Shinzo Abe unveiled on Wednesday an ambitious blueprint for improving Japan's long-term growth prospects. The plan includes provision, which are expected to have a short-term market impact. Abe also pledged to raise incomes by 3% annually and is going to set up special zones in order to attract foreign businesses. Moreover, he is considering to boost public pensions and other public funds by $2 trillion, to improve returns by increasing investment in equities.
Abe unveiled the third pillar of his economic revival plan that is built on his fiscal and monetary stimulus. Meanwhile, investors and economists welcomed the first two steps of this policy, however stocks have dropped after the biggest rally in 25 years, while the Japanese Yen has risen against the greenback, recovering from a four-and-a-half year low.
Expectations for Shinzo Abe and Haruhiko Kuroda are high, as the world's third largest economy is already showing signs of improvement. Nevertheless, in case of weak economic performance, investors are likely to be disappointed, meaning the markets are likely to remain volatile.
© Dukascopy Bank SA