The fourth virus wave has so far been largely concentrated in Osaka and a state of emergency declaration in that prefecture alone would not prevent national output from rebounding in Q2. However, as the surge in cases in Osaka is driven by more contagious variants of the virus, it’s likely that infections will soon rise elsewhere and we now assume that Tokyo will declare a new state of emergency before long, too. If that happens, GDP will stagnate in Q2.
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