Wage growth is set to remain sluggish next year and, with households also likely to be trying to rebuild their savings, we expect consumer spending to be subdued. In turn, this suggests that GDP growth in 2015 will be much weaker than many expect. Weak demand alongside recent falls in commodity prices will weigh on inflation, triggering more easing by the Bank of Japan, perhaps as early as the spring. This should result in further yen weakness and lift stock prices.
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