Would consumption tax hikes derail the recovery?

The economic case for raising Japan’s consumption tax is overwhelming. We think the government will decide to go ahead with the first hike planned for April next year, provided GDP has not slowed too far in Q2. Indeed, not going ahead would deal a severe blow to the credibility of “Abenomics”. The planned tax hikes will inevitably undermine growth in the coming years,but they are unlikely to derail the recovery completely.