Japan, World Economy at Risk If Abenomics Fails

The Bank of Japan’s strategy to end almost two decades of stagnation through unprecedented monetary stimulus may set off a ticking time-bomb for financial markets if it’s not followed by extensive structural reforms.

Such reforms, critical to the success of Prime Minister Shinzo Abe’s economic program — dubbed Abenomics — have historically proved difficult to implement. The combination of a debt load accounting for more than 200 percent of GDP and diminishing domestic demand for government bonds may sound the death knell for Japan’s economy, with or without Abe’s new economic policy. This would have global consequences.

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