Shinzo Abe

TOSHIFUMI KITAMURA/AFP/Getty Images

By Jonathan Soble

Sermons from the IMF tend to make Japanese leaders fidget nervously in their pews – all fire and brimstone about budget deficits and the need for austerity. But Christine Lagarde’s warning about the evils of deflation is more likely to elicit a full-throated “amen”.

Successive Japanese administrations have promised to end deflation – the “ogre”, in Ms Lagarde’s description, that has menaced the country’s economy since the late 1990s. But under Shinzo Abe, prime minister since December 2012, and his central bank governor, Haruhiko Kuroda, deflation-fighting has become the overriding priority.

They have been getting results so far: prices of consumer goods excluding fresh food are rising nearly 1 per cent year-on-year, thanks to the Bank of Japan’s ultra-accommodative monetary policy and the related plunge in the value of the yen, which has pushed up the cost of imports. Read more

It’s been a year since Shinzo Abe got financial markets excited with his plan to pull Japan’s economy out of its more than 15-year deflation. So has Abenomics been a success? Jonathan Soble, Tokyo bureau chief investigates: Read more

By Gideon Rachman
A few years ago Wired, the technology magazine, ran a regular feature called “Japanese schoolgirl watch”. The concept was not as dubious as it sounds. The idea was simply that the schoolgirls of Japan are technological trendsetters and that the gadgets they adopt today will go global tomorrow.

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♦ Slate magazine imagines how the US government shutdown would be covered by the US media, if it took the same tone that it does in its foreign coverage.
♦ The Washington Post is crowdsourcing for ideas as to how congress can be punished for the government shutdown.
♦ Smuggled letters from westerners caught up in the crackdown on the Muslim Brotherhood reveal that terrible prison conditions remained unchanged and there is a new willingness to subject westerners to the same treatment as Egyptians, according to the New York Times. Read more

By David Gallerano and Catherine Contiguglia
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Zojoji-temple in Tokyo (Getty)

The most significant International Olympic Committee meeting in a generation takes place this weekend – the committee will choose a host city for 2020 at the weekend amid reservations about all three candidates. Shortly after, it will have to decide on a successor for Jacques Rogge, president of the movement.

Thomas Bach, a German lawyer, is the favourite in the presidential race. But the decision over the 2020 host will be more difficult. Here’s what’s happened in the campaign so far and why the decision will be an uncomfortable one: Read more

By Gideon Rachman
Japan’s public diplomacy hovers between the ludicrous and the sinister. In recent months, the country has specialised in foreign policy gaffes that seem designed to give maximum offence to its Asian neighbours while causing maximum embarrassment to its western allies.

Not a milestone to rejoice in. Japan’s debt has tipped into the “quadrillion” zone for the first time. That is, as of the end of June, central government debt, looked like this: Y1,008,628,100,000,000, or $10.4tn.

It surely could not be a clearer message to Japanese Prime Minister Shinzo Abe that shilly-shallying over fiscal consolidation is no longer an option? Second-quarter economic output figures due on Monday are key to Abe’s decision about whether to raise consumption tax from 5 per cent to 10 per cent by 2015. Back in June in a speech in London, he pinned any decision to raise the tax – one he must make by October – on the strength of the economy in the second quarter. Read more

♦ Barack Obama said “you would have to slice the salami very thin” to find policy differences between Lawrence Summers and Janet Yellen, who are now in the running to chair the Federal Reserve. The FT’s Robin Harding takes a look at the salami.
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♦ Many in Japan are hoping that Shinzo Abe’s pragmatism will win out over his ideology.
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