Japanese Prime Minister Shinzo Abe’s grand plan to revive the economy, which has run into several stumbling blocks in the past year, is reaching a “moment of reckoning”, Goldman Sachs has warned.
There are several key turning points before the year-end that will be key in determining whether Abenomics will succeed or stumble, according to the bank, pointing to this week’s cabinet reshuffle, a potential expansion of the Bank of Japan’s (BOJ) aggressive easing program, and a decision on whether to move forward with a second tax hike in 2015.
“Abenomics is approaching a moment of reckoning, with the decision on whether to further raise taxes next year perhaps the most crucial one,” Naohiko Baba, Chief Japan economist at the bank said in a report. The government is due to make a call on a second hike in the consumption tax – to 10 percent from 8 percent – in December.
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