Abstract. The large-scale program of economic reforms, launched by Prime Minister Shinzo Abe in 2013, has shown first sings of encouraging in 2014. The Japanese economy has been broadly recovering mainly in domestic demand, including private consumption of household', firms' capital investment and public works financed from the government budget. Longstanding deflation has come to end. Three key factors worked in favor of this success: the April 2014 tax reform, “flexible fiscal policy” and monetary policy of quantitative easing.