FXStreet (Delhi) – Research Team at Goldman Sachs, expects Japan's growth to pick up in 2016. Key Quotes “The economy should bounce back somewhat from a technical recession in Q2 and Q3 of 2015, we expect the BOJ to augment its easing campaign in January10, and the government is apt to provide fiscal support (via a supplementary budget, intervention in “shunto” spring wage hike negotiations, and a possible cut in corporate taxes) ahead of the Upper House elections in July 2016. We forecast 1% growth in calendar year 2016, up from an expected 0.6% in 2015.” “Despite our expectation for better growth performance next year, the BOJ's 2% inflation target looks unachievable on its (already delayed) end-2016 timetable. In fact, a significant portion of the recent acceleration in the "core core" (ex-food and energy) and "new core" (ex-fresh food and energy) CPI indices is traceable to yen depreciation in the Oct/2014- Mar/2015 period; without another round of monetary easing and yen depreciation, the risk is that these effects fade and these inflation measures drift back down. As this becomes more apparent, we expect the BOJ to augment monetary easing further at its end-January meeting.” “Of course, the ultimate goal is domestically generated inflation, but wage pressures have been modest despite significant labor market improvement in recent years. Though parts of the labor market, particularly contract work, exhibit wage inflation, the ongoing structural shift from full-time work to lower-paid contract work has largely offset these effects on the overall wage bill. The coming year is a critical one to try to push the labor market to an overheated state and bring the inflation target within reach ahead of a second consumption tax hike, which has already been postponed to April 2017 (with a final decision on this to be taken in mid-to-late 2016).” For more information, read our latest forex news.