Shinzo Abe’s importance in halting Japan’s economic decline over the past two decades cannot be overstated.

What had been the world’s second-largest economy before China’s rise began to stagnate in late 1989 after a huge asset and property bubble burst that once contained the land on which Tokyo’s Imperial Palace is built. worth more than all of California.

A grim recession was followed by what became known as two “lost decades,” during which Japan suffered from low growth and deflation, forcing its consumers to hoard money rather than spend it.

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Successive prime ministers came and went, and all of them seemed unable to stop the decline – seven of them in the 1990s alone.

A similar change took place for much of the early 2000s, despite the charismatic Junichiro Koizumi, before Mr. Abe arrived in 2006 as the youngest person to hold the post in 65 years. His first administration lasted only a year, but then he returned in 2012 after a campaign in which he clearly promised to end stagnation.

Central to this was what became known as “Abenomics” – a three-pronged approach (Mr Abe specifically referred to as the “three arrows”) of ultra-loose monetary policy, flexible fiscal policy in the form of higher government spending and structural reforms aimed at strengthening the country’s labor market at a time when Japan’s population is rapidly aging.

Critics have condemned the policy as tried before, but overall it did more to halt Japan’s post-1989 decline than anything that had come before.

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Monetary policy has certainly been eased since Mr. Abe appointed Haruhiko Kuroda to head the Bank of Japan. Interest rates have gone into negative territory and an asset purchase program – quantitative easing in the jargon – has been launched on a larger scale than in comparable economies. To this day, the Bank of Japan holds a larger share of government debt than, say, the US Federal Reserve or the Bank of England.

On the fiscal side, things were less successful. Government spending has been increased, but the government’s reluctance to increase borrowing led to the misguided decision to raise consumer taxes from 5% to 8%, which Mr. Abe inherited from his predecessor. Naturally, this led to a decline in consumer spending and sent the economy into another recession.

The third arrow of Abenomics, structural reform, may prove to be Mr. Abe’s lasting legacy. Perhaps Mr. Abe’s greatest achievement has been to increase women’s participation in the labor market in a country where most jobs have traditionally been male-dominated. Moreover, he persuaded the Japanese, in part, to abandon their traditional fierce opposition to immigration. There are now areas in Tokyo where the non-Japanese-born population is as high as 15%. The latter factor may have had something to do with Mr Abe being such an outspoken patriot – some would say nationalist – who was unashamedly proud to be Japanese and whose tougher stance on foreign and defense policy, particularly on China, made the public more willing to accept higher levels of immigration when it came from him.

Unemployment has halved during Mr. Abe’s tenure. Other reforms he implemented also helped. He struck two huge trade deals – one with the US and one with the EU – that have benefited Japanese industry, while the country’s energy market has also been liberalized, lowering costs for consumers and businesses.

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Another key achievement was tackling Japan’s powerful farm lobby – a key priority in launching Abenomics – which also benefited consumers. Importantly, he also pushed through corporate reforms after a series of governance scandals at companies such as Olympus. It attracted more foreign investment to Japan than it had in the previous 20 years and breathed life into a previously moribund stock market. And he was also a key figure in securing Japan’s 2020 Tokyo Olympics – even though the pandemic forced it to be postponed by a year.

This is not to say that Abenomics was an undisputed success. Japan has yet to hit the 2% inflation target it had set out to achieve, although, ironically, that has now come as a result of the price shocks that have rocked the global economy this year.

In truth, it is impossible to say whether Abenomics would have ultimately achieved all of its goals due to Japan’s economy being derailed – as in many parts of the world – by COVID-19. Nor has Mr. Abe been able to do anything to slow the pace of Japan’s demographic decline.

But he probably did more than anyone to stop the rot that began in late 1989 — while making millions of Japanese people feel better.

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