Japan’s economic troubles offer a glimpse of a sobering future

JAPAN ONCE offered a cautionary tale of how macroeconomic mismanagement could transform a juggernaut into a laggard. As weak growth and low interest rates have spread to the rest of the world, however, it looks more like a window into the future. The view it reveals is less bleak than it used to be; “Abenomics”—the growth-boosting policies of the government of Shinzo Abe since 2012—have restored some vim. But as economic growth once again sags towards zero, it is worth asking whether Mr Abe’s programme, bold as it has been, is radical enough.

Japan earned its reputation as an economy adrift in the 1990s, when a popped financial bubble was followed by slow growth, deflation and low interest rates. As the government struggled to pry the economy from its rut, it pioneered policies like quantitative easing (QE; printing money to buy assets such as government bonds) that were used around the world after the global financial crisis. Economists debated how much Japan’s slump owed to weak demand rather than economic rigidities, for example an insufficiently limber corporate sector. Some doubted that, after years of easy money and bulging deficits, there was room left for stimulus to boost growth. Others reckoned that Japan could escape its rut if only its leaders were bold enough.