Abenomics has not altered Japan’s long-term outlook

Output may have contracted again last quarter, but Japan’s growth has actually been fairly healthy by past standards since Mr Abe returned to power, despite stronger demographic headwinds. But the decision to press ahead with the sales tax hike has hampered the Bank of Japan’s efforts to lift inflation, boost nominal GDP growth and put the public finances on a sustainable path. And with limited progress on structural reforms that could boost productivity,Abenomics has not significantly improved the long-run outlook for Japan’s economy.