"Given the consumption tax hike, it's inevitable that the economy will slow down compared with 2013. But it won't get any worse than a slowdown. I don't expect a recession."
- Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute Inc.
For most of the last year, the focus of financial markets was clearly set on debates whether the Fed will start tapering its stimulus programme, the questionable strength of the world's second largest economy as well as when and how the Eurozone will emerge from its longest-ever recession. However, many pundits have forgotten about the inspiring story in Japan. The 2013 year was full of positive changes in the land of the rising sun. After decades of economic stagnation and falling prices, the Japanese people managed to give Shinzo Abe the second chance and in September 2012 he was elected. Soon after the election he introduced a three-arrow strategy aimed at reviving growth in the world's third largest economy. And a half year later the economy is showing signs of stabilization. During the year the BoJ Governor Haruhiko Kuroda claimed many times the stimulus is working, saying the economy is on the right track. On Monday, Shinzo Abe stated that Japan is steadily recovering and is expected to shake off the crisis soon.
During the first press conference in 2014, Abe said the upcoming Diet session includes a 5.5 trillion yen stimulus package and a 1-trillion-yean tax plan. He also pledged to increase wages in spring, to make people feel economic recovery. Taking into account a recent boost in exports from Yen's depreciation and a planned tax hike in April, there is a high possibility the Yen will continue loosing ground against other currencies this year.
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