Japan has been instituting several new economic initiatives, known as Abenomics, to boost growth in the region. According to several investment trust managers, these efforts are proving effective.
Bailie Gifford Japan investment trust manager Sarah Whitley said:
“Abenomics is a wide-ranging programme to revitalise the Japanese economy and raise its growth rate in the long term, as well as provide short-term stimulus. During the past year the yen has weakened significantly, allowing Japanese manufacturing to be re-priced into world markets, company sentiment has improved tremendously and there are encouraging signs that growth is spreading into the broad domestic economy.”
Aberdeen Japan investment trust manager Kwok Chern-Yeh added that while some are concerned, Japan’s new sales tax may not have a negative impact on the situation.
“The consumption tax hike is a crucial step towards fiscal consolidation – raising the national sales tax from 5 to 8 per cent will help address the nation’s ballooning public debt,” he said. “One worry in the short term is that discretionary spending will fall after the tax has been implemented, although the government is hoping to cushion the short-term impact with a ¥5.5 trillion stimulus package. If Abenomics works and the economy grows then consumers will spend more as the economy rises anyway.”