Forex Flash: Japan consumption and investment likely to be encouraged - RBS

FXstreet.com (Barcelona) - With Nikkei index recently climbing to almost new 5-year highs above the 13.3k mark, RBS thinks that this has “fuelled expectations for economic growth,” the bank says, adding: “consumption and investment in the private sector are likely to be encouraged by the rise in asset prices and a drop in capital costs.”

“We will be keeping a watch on growth in employment in the non-manufacturing sector and the increasing pace of capex to see if these trends develop fully and can be sustained long term,” the analysts add. “From the productivity perspective,” they continue, “conditions do not seem favourable for an increase in nominal wages yet, so it is still hard to see deflation being overcome through a rise in wages. However, we believe that the rise in asset prices is the breakthrough that will challenge the fixed notion that 'lower population = lower growth = disinflation' “ RBS concludes.