Consumption to rebound despite states of emergency

Three of Japan’s 47 prefectures have reintroduced states of emergency over the past few days, and we think that more will follow over the coming weeks. As such, the recovery in economic activity is likely to stall. But given the strength of the rebound in consumption in June – coupled with the reluctance of authorities to contain the virus with the same kind of blanket restrictions that were imposed back in April – output is still set to make up a fair amount of lost ground in Q3.