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Japanese Prime Minister Shinzo Abe’s rise to power in 2012 ushered in bold policies known as “Abenomics” that helped revive the economy and boost corporate profits, exports and jobs.

However, the record plunge in Japan’s economy in the second quarter due to the coronavirus has wiped many of the gains of those policies, dealing a political blow to Abe a year before his term as head of the ruling Liberal Democratic Party (LDP) ends.

Japan’s real gross domestic product (GDP) hit almost 540 trillion yen ($5.09 trillion) in September last year, but then began to slide as the U.S.-China trade war and a sales tax hike hit exports and consumption.

The pandemic has since knocked real GDP to 485 trillion yen, its lowest since the 2011 earthquake and tsunami.

To deal with the pandemic hit, Abe’s government has deployed combined stimulus spending worth $2.2 trillion, almost half the size of the economy.

That boosted budget spending and added to Japan’s ballooning public debt, already the biggest among advanced economies.

Abe considers strong jobs growth as one of the successes of his policies, which he attributes to strong economic growth although a dwindling working-age population has also kept the jobs market tight.

Japan’s jobless rate stood at a 27-year low of 2.2% in December last year, a little over half the rate when Abe took power in 2012, although the pandemic has since nudged it up.

Despite years of heavy money printing by the Bank of Japan, inflation had failed to accelerate toward its 2% target, peaking at 1.4% in 2014 after which oil prices slumped.

The pandemic is now stoking fears of deflation as weak household spending depresses prices.

The BOJ’s years of money printing have expanded its balance sheet dramatically, which has drained market liquidity.

While the pace of asset purchases has slowed in recent years, the pandemic has forced the BOJ to reopen the monetary spigot.

Critics warn the BOJ’s oversized balance sheet would make any exit nearly impossible without causing market disruptions.