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Credibility at risk despite likely consumption tax hike

The key event this week will be the government’s decision whether or not to raise the consumption tax as planned next April, which should be announced after the release of the Q3 Tankan survey on Tuesday. We expect the Tankan to show that the economic recovery has retained sufficient momentum to allow PM Abe to give the green light for the tax hike. But at the same time, earlier promises of fiscal consolidation will have to be watered down.

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