"This is the first government in 20-some years that is trying to do the things Japan needs very desperately."
- Richard Koo, Nomura Research Institute chief economist
One of Japan's leading economists, Richard Koo, pointed out that the world's third largest economy is on the path to sustainable recovery, as economic policies are spreading throughout the country. On the other hand, he stressed out that the central bank could upend the upward momentum if the stimulus is not enhanced further. Shinzo Abe's set of measures aimed at reviving growth is finally addressing nation's major fundamental problems: getting companies and households to borrow. While there are still concerns over the subdued borrowing, tax breaks for corporate investment can definitely help to overcome the barrier. This is one of the part of Abe's strategy, while another positive aspect of Abenomics is unprecedented government stimulus aimed to make up for a lack of private-sector demand.
Notwithstanding, the fact the economy is improving and both prices and growth outlook were raised, BoJ Governor Haruhiko Kuroda is facing a rift on his actions with half of the central bank members either voicing doubts over the rosy forecasts or calling for Kuroda's ambitious inflation target to be watered down. While the rest of the members are still loyal to the Governor, another part can affect the timing and measures the BoJ can deploy if necessary to boost growth. Meanwhile, a poll conducted by Reuters showed the Japanese Yen is likely to reach 108 in a year, as the central bank will expand its already aggressive stimulus.
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