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Chances of localised lockdowns rising

With coronavirus cases hitting record-highs in Tokyo and rising in other urban areas, the government announced on Monday that it plans to give local governments greater power to request business closures. That could include penalties for firms that ignore requests to close. The plan to revise the special coronavirus law appears primarily aimed at giving local authorities the ability to impose restrictions without the need to declare a state of emergency again. It shows that the government is readying itself for the possibility of targeted, localised lockdowns if cases continue to surge. The recovery in consumer spending has been disappointing so far in Q3 – for example, there were still very few people venturing to the cinema in early-July. And the prospect of many businesses in Tokyo, and potentially those in other major cities such as Osaka, having once again to close presents downside risks to our forecast of a 4.5% q/q rebound in consumption in Q3 following a 8% q/q drop in Q2.

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