Why wage increases will spur on Japan's economy

Investors concerned that Japan's economic revival has run out of steam should look to the emergence of corporate capex and wage rises for hope, explains SuMi Trust's Genzo Kimura.

Wage increases look set to be the key driver for continued growth in Japan in the future. We expect that the progressive corporate tax cuts delivered recently by prime minister Shinzo Abe will encourage further rises in pay next spring when annual wage negotiations are typically held. Higher salaries are a significant factor in helping to keep inflation expectations tense in the economy. So far, inflation has resulted from the impact of the currency’s devaulation, but the yen has now stabilised after reaching Y100/$1. The recovery is not being led by exports but by domestic consump...