The Bank of Japan is increasingly confident that the economy is weathering the recent tax increase and on its way out of deflation, but another threat to that optimistic scenario is lurking in the form of weak exports.
If shipments abroad continue to fall short of the central bank's forecasts, the recovery could stall and the BOJ might be forced to ease policy again in the coming months.
Growth has returned to Japan, helped greatly by massive monetary stimulus unleashed 13 months ago when Haruhiko Kuroda took the helm at the BOJ. Early signs support the bank's view that last month's increase in the consumption tax will not derail the recovery or drag the nation back into deflation.
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