JAPAN enters the New Year with great expectations for the success of "Abenomics" - that set of economic policies to which Prime Minister Shinzo Abe has lent his name - but there are growing concerns that his increasingly radical political policies could derail his success on the economic front.
For now, he is riding high, with the country's deflation apparently ending; Tokyo stock prices having closed 2013 at a six-year high; Japanese corporate profits growing healthily; unemployment under control; and wages set to rise this year, boosting consumption along the way.
At a year-end ceremony at the Tokyo Stock Exchange (TSE) which capped the best year for Japanese stocks since 2008, Mr Abe said: "Buy my Abenomics next year as well."
For the moment at least, markets are continuing to do that.
The consensus among experts, including those who took part in a New Year Investment Round Table organised by The Business Times, is that the yen will continue declining in early
2014 under the impetus of a widening interest rate differential favouring the US dollar and a resurgence of yen "carry trades".
This will push up corporate profits in Japan further and boost stock prices to even higher levels, as company earnings benefit from the impact of a falling yen on export earnings.
At the same time, a pledge which Japanese business lobby Keidanren reportedly made to Mr Abe - that it would push Japanese firms to raise basic pay during the annual shunto or "spring wages offensive" - should boost consumption despite a scheduled rise in Japan's national sales tax in April.
Just in case the tax rise threatens consumption, Mr Abe has ordered a 5.5 trillion yen (S$66 billion) supplementary Budget to be enacted in the New Year in order to underpin sentiment. Meanwhile, the Bank of Japan (BOJ) stands ready to ease monetary policy even further if the economy looks like it is slowing.
Against this backdrop, the continuing success of Abenomics looks virtually assured in 2014, say some financial analysts, even as others see storm clouds on the horizon for Japan as a result of "Abepolitics".
Mr Abe's highly controversial visit last week to Tokyo's Yasukuni memorial shrine - where the names of Japanese "Class-A War Criminals" are enshrined with those of other Japanese war dead - guarantees growing friction between Japan and the rest of East Asia, Mr Abe's critics say.
Among these are former vice-chairman of Goldman Sachs (Asia) Kenneth Courtis, who told BT that "the current government in Tokyo is making it virtually impossible through a series of provocations to come to any amiable settlement with China, Taiwan, the Koreas and Russia".
The administration headed by Mr Abe and Finance Minister Taro Aso is the most nationalist and far-right government Japan has had since the collapse of the Tojo wartime Cabinet in August 1945, said Mr Courtis, who is also co-head of Themes Investment Management.
"Do not be surprised to see more moves by the current Japanese government in the year ahead which will poison still further relations between Tokyo and much of the rest of Asia," he added.
This could damage the all-important trade and investment relations between Japan and the rest of the region, including relations with the Asean states; already, some, including Singapore, have expressed disquiet over Mr Abe's visit to Yasukuni, analysts say.
The visit provoked an unexpected rebuke from the US administration of President Barrack Obama, which described the gesture as "disappointing" and likely to further inflame ties between Japan and its neighbours.
US-Japan relations are at a sensitive juncture: Washington is embarking upon closer military cooperation with its "ally" Japan; the US and Japan are the largest economies leading negotiations over enlarging the 12-member Trans-Pacific Partnership (TPP) group.
Meanwhile in China, which is scheduled to host important meetings of the Asia Pacific Economic Cooperation (Apec) forum in Beijing this year, Chinese leaders have effectively ruled out any summit meeting with Mr Abe in light of the Yasukuni visit and territorial disputes between the two countries.
Japan cannot expect to continue enjoying a golden age of "Abenomics" as long as it persists with actions that threaten to isolate it from the rest of the region, even though economic dynamics appear to be moving strongly in its favour for the present, some economists argue.
*Round table: Where to put your money, Page 17