The Spring of Wage Hikes Has Arrived!(Apr 2015)

◆The Spring of Wage Hikes Has Arrived!: The virtuous circle brought on by Abenomics is accelerating. According to the Keidanren’s initial calculations of April 16, the rate of wage increase coming out of the 2015 annual spring labor offensive (the total of pay-scale increase and annual wage hike) is 2.59%. This represents the highest growth wages have seen in the last seventeen years. The pay-scale increase is seen at around 0.7%, and according to DIR calculations, promises to push personal consumption up by around Y1.4 tril. We expect Japan’s economy to gradually recover in 2015 due to the following factors: (1) Continuation of the virtuous circle brought on by Abenomics, and (2) The gradual firming up of exports centering on the US, leading to a moderate recovery trend.

◆ Four risk factors facing Japan’s economy: Risks factors for the Japanese economy are (1) The Triple Weaknesses – a weak bond market, weak yen, and weak stock market stemming from fears that Japan could lose its fiscal discipline, (2) China’s shadow banking problem, (3) tumult in the economies of emerging nations in response to the US exit strategy, and (4) a worldwide decline in stock values due to geopolitical risk.