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Japan's economy grows under Shinzo Abe's leadership

Japanese Prime Minister Shinzo Abe answers a question at the Upper House's budget committee session at the National Diet in Tokyo on May 15, 2013.

The economic news out of Tokyo overnight was pretty good. The economy there grew at what you can fairly call a booming 3.5 percent annual rate last quarter. Nifty in and of itself -- downright awesome when you remember Japan's lost decades.

Credit -- most of it, anyway -- goes to Prime Minister Shinzo Abe, who took office in December with an policy prescription that's come to be known as 'Abenomics.'

'Abenomics,' says BBC Correspondent Rupert Wingfield-Hayes, isn't really about doing anything new, but combining two well-known strategies: Government spending, especially funding for public works; and the Bank of Japan printing a huge amount of money.

Those two moves have helped the Japanese stock market skyrocket, while at the same time pushing down the value of the yen. This was the desired effect for the government, says Wingfield-Hayes, because it wants Japanese companies to be able to export their goods at lower prices.

So far the plan seems to be working. Public sentiment is much more positive than it was in years past, and consumer spending is up.

Still, this kind of pace can't last forever.

"There are real dangers in this," says Wingfield-Hayes, "because while exporters like it, importers hate it." Japan imports a lot of food and almost all of its energy, he points out, and those rising prices will eventually affect Japanese consumers.

"This is a balancing act," adds Wingfield-Hayes. "It if goes too far, it's going to cause a lot of problems."

For a society that has struggled for the last few decades, change can be difficult.

"People want change," he says. "This has been a very comfortable country, a country where the people have been looked after by the system and change is frightening."

About the author

Rupert Wingfield-Hayes is a reporter with the BBC based in Japan.

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