In 2016, growth remained sluggish, driven by public consumption and to a lesser extent, by private consumption and external trade. The Abenomics policies have not given the expected results: the risk of deflation persists, the level of public debt is still very high. Growth prospects in 2017 remain limited. Indeed governmental support measures for the activity have been reduced. Private consumption will always support business, but its dynamics remain modest, wages still have not taken off despite a tight labour market (unemployment rate at the lowest around 3%). Wage growth is still hampered by the tendency of companies to insufficiently redistribute their profits, and by the rigid structure of the Japanese labour market (low mobility and marked duality). Also the same slight rise in inflation has a negative effect on real wages. Indeed inflation, after failing to return to positive territory in 2016, could be slightly greater than zero in 2017 due to the gradual rise in oil prices, but remain well below the Central Bank's 2% target. Foreign trade is expected to be sluggish, and would increase slightly under the effect of a more favourable business partners environment while being hampered by the past appreciation of the yen. Private investment will remain sluggish due to significant investors’ wait and see attitude, although profits, corporate liquidity and financial conditions are still favourable. The still accommodative monetary policy would support the activity (deposit rate at -0.1% and asset purchase program of 80,000 billion yen per year). In September 2016, the monetary policy framework evolved by introducing rate curve control, including a long-term interest rate target: the government is committed to buying as many bonds as necessary to maintain the 10-year sovereign interest rate at around 0% and will increase the monetary base as much as necessary in order to reach the inflation target of 2% (which appears very ambitious).

The public deficit should stabilise at a high level in 2016. The increase in social spending significantly weighs on the state budget while revenues are insufficient. However, the government decided to postpone the VAT rise again from 8% to 10% until October 2019. While in 2016 the stimulus packages have multiplied (the last of which was 1.5% of GDP for the 2016/2017 fiscal year), their effects would be lower in 2017. The current trajectory of the debt does not appear sustainable, especially as health costs continue to increase with the ageing population. The prospect of the 2020 Olympics and the increase of expenditures brought as a result thereof is not expected to foster a recovery path. The government's goal of achieving a primary surplus by 2020 would appear unrealistic.

In September 2015, Shinzo Abe was reappointed to head the LDP (Liberal Democratic Party in power) and his party now holds half of the seats in the Senate following the senatorial elections held in July 2016. The party should dominate the political scene in 2017.