Economics & Strategy — Economics: Third

Bank of America Merrill Lynch’s Masayuki Kichikawa advances from runner-up to third place. “He has a deep understanding of international financial flows,” according to one portfolio manager, “and provides an accurate overview of the Japanese economy.” Kichikawa is bullish for the near term but cautious going forward, forecasting real gross domestic product growth of 2.3 percent for fiscal 2013, which began this month, and 0.3 percent for fiscal 2014. Prime Minister Shinzo Abe’s call for aggressive monetary easing to spur inflation, a strategy embraced by newly appointed Bank of Japan governor Haruhiko Kuroda, “is quite likely to succeed because it tackles one of the fundamental problems Japan has faced,” Kichikawa believes. “It should change people’s expectations for inflation and thus real interest rates.” The administration’s plan to spend ¥10 trillion ($105.8 billion) on infrastructure projects through next March will likely boost the economy in the short term, but a lasting recovery is dependent on the government’s choosing projects that strengthen the supply side, he adds. Attempts to stimulate long-term growth through subsidies and tax incentives to certain sectors “make some sense,” Kichikawa says, “but I would be more optimistic if we could see more initiatives to reform the labor market, cut the corporate tax rate and deregulate the service industries.” — Thomas W. Johnson