The Japanese economy continues to grow above its potential, while quarterly GDP fluctuated widely in the first three quarters of 2018. Consumer price inflation has continued to rise steadily to 1 percent, broadly approaching the medium-term inflation expectations of households and corporates. Downside risks to the near-term outlook have intensified, mainly due to external risk factors with some tail events. Structural challenges include demographic headwinds from population aging and low fertility rates, weakening of fiscal discipline, and prolonged easing of monetary policy. Abenomics should be periodically reviewed and recalibrated, considering the achievements and shortfalls thus far in order to enhance its effectiveness and sustainability in reviving the dynamism of the economy.