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Entering Q2 on a stronger footing

With mobility rebounding and the state of emergency finally being lifted across all prefectures this weekend, economic activity should enter Q2 with some momentum. While the second state of emergency has been less restrictive and more targeted than the first, bars and restaurants have still been hit hard by 8pm curfews in most major urban areas and by fears over infection. The number of people going to restaurants has doubled from where it was in mid-January at the height of the third wave as regional restrictions have been lifted. Once Greater Tokyo – the last region still facing restrictions – exits its state of emergency on Sunday night, activity in COVID-exposed sectors should rebound further. So while it’s still touch-and-go whether the economy will avoid a contraction this quarter, GDP should rise by around 1% q/q next quarter as domestic demand bounces back from the third wave.

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