Was Q1’s strength really due to Abenomics?

The encouraging first quarter GDP data have prompted us to revise up our growth forecast for 2013 as a whole. However, while “Abenomics” has certainly boosted sentiment, the jury is still out on whether the underlying economic fundamentals will improve sufficiently to sustain the recovery – especially if the government presses ahead with the planned consumption tax hikes. We therefore continue to expect Japan to slip back into recession, yet again, in mid-2014.