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Abenomics and You

2013/05/23

The yen has been slipping and sliding in recent years, many of us got used to the strong yen situation of years past, which was nice for anyone living in Japan and wanting to send money or travel abroad. But recently Japan's yen has sunk down almost 10 percent because of Prime Minister Shinzo Abe's economic shock therapy, "Abenomics". A weaker Yen, means that foreign goods are more expensive, it is difficult to travel from Japan, and gasoline prices will also rise, making other goods more expensive to buy as well. But the gamble is that these will be offset by a "trickle-down" growth in the economy, because Japan is largely based on foreign exports, and with a weaker yen, it is easier for Japanese goods to be bought overseas. This is being seen as a humbled Sony, once a titan of world industry, recently sprang back announcing solid profits for the first time in five years due to the plunging yen. Honda, another corporate icon, triumphantly announced a return to Formula One racing, rejoining an exclusive club of high-performance carmakers after having slinked away when cash ran low. The Japanese economy has fallen from No. 2 to No. 3, behind the U.S. and China. But this is part of their strategy, to encourage foreign purchases of Japanese goods. That Japan would try such a seemingly radical policy after years of political paralysis reflects a newfound feeling of urgency. With China's economy and territorial ambitions growing, the Japanese have begun to see the potential dangers of resigning themselves to what many have called a "genteel decline." Earlier this month, China's Commerce Minister Chen Deming said he's concerned at the risk of competitive devaluations and warned that emerging markets will be the ones left to pay the price for currency wars.

 

But what does all this mean for English Teachers living in Japan? It's probably not very good. It means that things you want to import from your country of origin will be more expensive. It is more difficult for you to travel back overseas and the money you send back to pay for student loans, family, or other expenses, will lose value in currency transaction. It means that Japanese products will probably be cheaper in other countries than they are even in Japan. The price of domestically manufactured items with imported raw materials will also rise.

It is certainly a gamble because if Abenomics purposefully weakens the yen, and still no one buys Japanese goods, then it is economic hardship for nothing. The skeptics of the Abenomics plan say it invests nothing whatsoever into the daily lives and well-being of average people in Japan. The weak yen will also do nothing whatsoever to address the slowly dying population of Japan. That it will benefit the upper class with the lower and middle classes bearing the hardship, who really need better schools and cheaper daycare so they can more easily raise a child and help prevent Japan's looming population crisis. Skeptics say that Abenomics helps no one but the large export companies. The one silver lining for middle class foreign English teachers is that better English education programs will be needed to help with training Japanese workers to export Japanese goods overseas. Also, it is a great time to invite your families to visit Japan.

But with initial successes seen in the onset of Abenomics, there is room for optimism as well. The strategy, as of now, seems to be working. Stocks are up, consumers are spending, housing is up, and the money is moving.



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