Macquarie has forecasted Japan to be the fastest growing G7 nation over the next two years. Macquarie has lifted its forecast for Japanese GDP growth from 3 per cent to 3.6 per cent financial year. This stronger grow is a "reflation" of domestic demand which accounts for structural growth that is largely independent of the state of the global economy.
This forecasted Japanese growth implies positive revisions to corporate earnings forecasts and an increase in capacity utilisation. Macquarie expects the Bank of Japan to respond to the forecasted stronger growth if realised - by ending the banks' quantitative easing policy within the next few months, while it expects official Japanese interest rates to increase towards the end of the year.
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