Interview: Confidence in Abenomics falls dramatically: Australian expert

The Abenomics, which started off with much fanfare, has seen its worshippers dwindling and confidence in Japan's economic future fell dramatically, said an Australian economic expert.

Abenomics started in late 2011 or early 2012, but really took off later in the year, Shane Oliver, chief economist at AMP Capital Markets in Australia told Xinhua in a recent interview.

"There were initial signs of success with Japanese growth seeming to improve and inflation pushing into positive territory despite weak oil prices," said Oliver.

However, he said confidence in the so-called Abenomics "has failed dramatically over the last year or so."

According to Oliver, the economic reform program has been generally disappointing. "There hasn't been really a lot of action on the supply side reform process," he said.

Oliver said the initial phase of Abenomics was helped as it coincided with strengthened value of the U.S. dollar, which had boosted its export.

More recently though, particularly through this year, the U.S. dollar has been sort of going down, which in turn has made it harder for Japanese exporters, he said.

Oliver revealed a routine in Japan's economic trajectory in the past two decades before Abe took the helm of the country.

"There have been bouts of similar enthusiasm, perhaps not quite aggressive as under Shinzo Abe over the last 20 years where a new policy maker would come along and really ramp up the stimulus efforts, only to give up a few years later and then Japan's back into rolling recessions and deflation," he said.

Oliver said there probably is going to be another round of stimulus to shun this stereotype, and the most probably might be another round of quantitative easing in the country.

However, investors are fairly mixed in terms of the perceptions on the possible effect of further efforts by Abe's government.

Oliver said there was still some confidence around 2013-14, and "that confidence on the part of investors has waned dramatically ... Now, there' s an increase in derivative scepticism as to whether Abenomices will be able to deliver on its promise."

The expert also noted that Japan is losing its innovative edge, an important drive of economic growth. Oliver said the innovative forces Japan enjoyed by the end of last century has shifted in the direction of China and the United States.

According to him, innovations coming out of Japan don't seem to be ground-breaking as they once were.

"Whether they're on this sort of scale that occurred in the 80s and 90s, or 80s in particular, it's doubtful whether Japan could do that again," he said. Endi