Machikado Keiki Japan's debut single references quantitative easing and construction bonds, but they are not alone in taking an interest in their PM's strategy for growth: 'Abenomics'

To get an idea of how Japan's prime minister, Shinzo Abe, is faring in his quest to lift his country out of two decades of stagnation, look no further than the skirts of the girl group Machikado Keiki Japan.

The band, whose name translates roughly as "street corner economic conditions", became a bellwether for the health of the world's third biggest economy earlier this year when they promised to shorten their skirts every time the country's stock market made significant gains.

The four-member group's novel economic indicator has raised a few eyebrows – not least because one of the members is a 16-year-old schoolgirl – but there is no faulting their interest in the fortunes of the Nikkei 225 stock index.

Their debut single, Abeno Mix – complete with unlikely singalong references to quantitative easing and construction bonds – takes its cue from Abenomics, an ambitious programme of fiscal stimulus, monetary easing and structural reforms that its chief architect believes will lift Japan out of 20 years of deflationary purgatory.

Six months into the experiment, Abe's vision is taking shape. The Tokyo stock exchange has risen around 50%, while the yen has fallen about 25% against the US dollar since late last year, to the relief of hard-pressed exporters.

Japan's PM Shinzo Abe (Kenichiro Seki/Xinhua)

This week the government said the economy had grown at an annualised rate of 4.1% during the first quarter, while rising exports and solid private consumption prompted the Bank of Japan to raise its assessment of the economy for the sixth straight month.

"Japan has taken the right steps so far, which is unusual for a Japanese government, and this is being reflected in the mood of optimism and support levels for Abe," said Martin Schulz, chief economist at the Fujitsu Research Institute in Tokyo.

As world leaders prepare to meet at the G8 summit in Northern Ireland next week, Abenomics is attracting interest from other developed economies battered by austerity. France's socialist president, Francois Hollande, conceded during a visit to Tokyo last weekend that Abe's focus on growth held lessons for European leaders obsessed with belt-tightening.

Abe's growth-led strategy and fight against deflation, Hollande said, was "good news for Europe, because in Europe we also have to give priority to growth".

Abe's early success has enriched investors and brought relief to exporters, but workers say they have yet to feel the benefits. "The economy is doing okay under Abe," said Toshio Watanabe, a "salaryman" in his early 50s who was taking a cigarette break with colleagues in the Tokyo business district of Hamamatsucho.

"But I don't think we've reached the point where we can say things have definitely improved. All I can say now is that the weak yen has made it more expensive for me to go on a foreign holiday."

His colleague, Takeshi Tomoda, believes that most Japanese back Abe's mission. But having known nothing but deflation all his working life, Tomoda's optimism is tinged with caution.

"Japanese people tend not to get carried away, they always harbour doubts," he said. "People who are about to retire probably don't worry about the economy too much, but for my generation it's an urgent problem. I've already resigned myself to the fact that I won't get a pension anywhere near as big as my parents', if I get one at all."

Economists agree that Abe's experiment will fail if his aim falters with the "third arrow" of economic revival: structural reform.

He has yet to flesh out how he intends to bring more women into the job market, help a shrinking workforce support the country's rapidly ageing population, and overcome strong opposition from the country's powerful farming lobby to agricultural liberalisation.

"Structural reform is the area in which he could get into trouble," Schulz said. "That is why everyone is taking this so seriously. This is Japan's last chance to get it right before it finds itself at the edge of a very steep cliff."

Koichi Nakano, a political science professor at Sophia University in Tokyo, says Abenomics will only have succeeded if it narrows the growing gap between rich and poor in one of the world's wealthiest societies.

The last time corporate profits made significant gains, in the mid 2000s, coincided with the rise of low-paid contract workers and larger numbers of people falling into poverty, Nakano said.

"Abenomics is mesmerising financiers with opportunities for quick profits, but it's not going to solve Japan's economic woes," Nakano said. "Bigger profits for financial institutions isn't the same as helping ordinary workers. Abe hasn't concocted a magic potion to solve the economic woes of our time."

Dramatic fluctuations in the Nikkei stock average in recent weeks have played havoc with Machikado's hemlines, which become longer whenever share prices falter. Only time will tell what form the finished article takes: a boom-years miniskirt, or the knee-length look of deflation.