Aileen Zhou
According to CCTV news, on the 8th local time, former Japanese Prime Minister Shinzo Abe was shot while delivering a speech in Nara that morning.
According to media reports, Shinzo Abe was still conscious when he got into the ambulance. At present, Shinzo Abe has no vital signs.
As of 12:54 on July 8, Beijing time, the Nikkei 225 index rose 0.52%.
As a safe-haven currency, the Japanese yen rose sharply against the US dollar, with USD/JPY at 135.5.
However, the yen has lost nearly 23% of its value against the dollar over the past year.
Under the global trend of interest rate hikes, the Bank of Japan has always maintained interest rates at 0.10%, and continued to maintain the policy of 10-year bond yields not higher than 0.25%.
Today, the Japanese economy is showing signs of weakness.
The epidemic has seriously delayed the recovery of Japan's domestic economy, including high prices of energy and food. Although it has driven Japan's stagnant inflation rate, it has also caused a new downturn in consumption; the depreciation of the yen is intended to stimulate the economy, but it has hit a record high of nearly 24% against the US dollar. The yen's new low this year has also made Japan's import costs soar, and Japan faces more severe stagflation risks.
This picture also contrasts with the economic recovery trend in 2013 when Shinzo Abe was prime minister.
As the world's third largest economy, Japan's economy stepped out of negative growth in the first three quarters of 2013 and embarked on a recovery path.
In the eyes of the Japanese government at the time, much of this was due to "Abenomics".
On January 24, 2014, Abe was also the first Japanese leader to give a keynote speech at the World Economic Forum (also known as "Winter Davos").
A reporter from China Business News reported at the time that in a special speech delivered that night, Abe expressed his determination to push forward reforms against all odds and keep the economy growing.
He said Japan was emerging from chronic deflation and was getting back on track with fiscal consolidation.
"This is not dusk, but a new dawn for Japan," Abe declared. "I am willing to break vested interests as strongly as a drill. In the next two years, no vested interests will be exempted under my drill."
Abenomics, launched after Abe came to power in late 2012, has attracted worldwide attention.
Abenomics consists of the "three arrows" of aggressive monetary easing, aggressive fiscal policy, and structural reforms to boost growth.
In April 2013, the unprecedented “Quantitative and Qualitative Easing” (QQE) program announced by the Bank of Japan, driven by the depreciation of the yen, helped export a strong rebound and increased inflation, which is considered to be a remarkable performance of the effectiveness of Abenomics.
Subsequently, Abe's "third arrow" structural reforms also came into play.
The Japanese government decided to cut the effective corporate tax by 2.4 percentage points from April 2014, from 38% to 35.6%.
At the same time, the consumption tax was raised from 5% to 8%.
In addition, Japan scrapped decades of subsidies for rice production, allowed online sales of over-the-counter drugs, and liberalized the electricity market.
At the same time, Abe also pledged to continue forward-looking reforms, including making women occupy 30% of top business positions by 2020, giving foreign shareholders a greater say in Japanese corporate governance, and reforming the labor market so that Workers can move from old industries to new ones.
At that time, Japan was gradually coming out of the deflation of the past two decades under the impetus of Abenomics, and the Nikkei index also rose by a full 57% in 2013, the best performance in the past 40 years.
However, Blanchard, then the IMF's chief economist, said at the time that Japan's economic expansion "was largely driven by fiscal stimulus and exports." If growth is to continue, consumption and investment must dominate.
At the 2014 forum, Schwab, chairman of the World Economic Forum, asked Abe whether Japan's issuance of more government debt to finance stimulus plans would lead to a debt crisis.
Abe said that would only revive economic growth and that Japan could raise taxes to pay down its debt.
"The Japanese economy is starting to break out of deflation. Wages will rise this spring. The long overdue rise in wages will lead to higher consumption," Abe said.
Nomura Oriental International Securities conveniently stated that after the bubble economy burst in the 1990s, the amount of Japanese government debt and its ratio to nominal GDP (the leverage ratio of the government sector) both rose sharply. It was not until the Abe government came to power that the leverage ratio of the government sector appeared. fell back slightly.
On the one hand, Japan's economy has improved under the stimulus of "Abenomics", and at the same time, the growth of government debt has been restrained.
On the other hand, because the Japanese Government Pension Investment Fund (GPIF) has gradually increased the proportion of equity investment, the financial situation of the Japanese government has been improved to a certain extent with the increase in income.
However, after the outbreak of the new crown epidemic in 2020, Japan's government debt has grown significantly again. According to Wind data, the leverage ratio of the government sector has reached a new high, at 225.3% in 2020.
By the end of 2021, Japan's government debt accounted for as much as 2.25 times nominal GDP.
Concerns about Japanese government debt are rising.
Against the background that inflation levels in developed countries in Europe and the United States continued to hit new highs and the Federal Reserve and the European Central Bank accelerated monetary policy tightening, the market was skeptical about whether the Bank of Japan could continue to maintain the yield curve control (YCC) policy. If you choose to adjust financial policy, the huge government debt burden may cause the Japanese government's credit to deteriorate and have an impact on the global financial market.