WHAT IS ABENOMICS?

The word Abenomics is known after the former Japanese Prime Minister Shinzo Abe, who is one of the longest-serving Prime Minister in Japan. Abenomics means the economic strategies that were followed by Mr.Shinzo Abe.

When Shinzo Abe took the office as the Prime Minister of Japan, the economic conditions in Japan were not so great. Japan's GDP growth rate was negative (-4.3%). This means Japan's economy was crumbling and their exports were reduced and were heading towards recession. And an important fact about Japanese people is that they are not good spenders. They spend very little with on the other hand affected businesses, manufacturers, and industries because none of them had incentives to grow the business.

and Abenomics is all about one can revive the situation. Shinzo Abe was inspired by a folk tale that he had heard. The folk tale is of a ruler who had 3 sons and the kingdom in which the ruler was the emperor was prone to wars. There was an imminent war that was coming up. So, he told one of his son "I want you to take this arrow" which he gave his son and asked him o break it. And his son broke the arrow without breaking a sweat. And then the ruler gave his son 3 arrows bound together and asked him to break. The son couldn't even make a dent in these bound arrows. The ruler told his son that "if you are a singular arrow you will be defeated but on the other hand if you stand together and work in unison, it will be very hard for you to be defeated. In this context Shizo Abe did was, he took the fiscal policy, monetary policy, and structural reforms and made them work in unison to facilitate the growth of Japan. 

Now, how did Shinzo Abe work it out:

1. Shinzo Abe started to spend trillions of Japanese money on infrastructural development, such as building roads, flyovers, etc. Infrastructural development in turn will create employment growth and this will help people to be financially stable to an extent. And as salary increases, people start spending.

2. And yet another problem was that people were not borrowing money from banks as the interest rates were high. So, thereby Ae reduced interest rates on loans, which means he introduced zero-interest-rate on loans. And also Japan started to print money. And in effect, there was a great flow of money in the economy and as a result people also started to spend more. And through this Shinzo Abe aimed the increase inflation. Which means an increase in inflation means the growth of the economy.

3. Abe also encouraged women to get into work so that the labor shortage can be rectified. Abe also introduced certain schemes for children in order to encourage the growth of the birth rate.

Therefore the term Abenomics is been known after Mr. Shinzo Abe.