Can we get much higher?

The Japanese economy is entering 2014 on a strong footing. Retail sales are at their highest level since the late 1990s, business surveys and the Nikkei have climbed to multi-year highs, and employment is expanding rapidly. However, recent positive momentum is linked to the upcoming consumption tax hike, which is prompting households to bring forward spending, and so may not last. The surge in inflation has already undermined household purchasing power, and, unless wage growth picks up soon, the higher sales tax will only add to the pressure on consumers. After a strong start therefore, a moderation in economic growth in the course of 2014 seems likely.