Off the back of the weak Q1 GDP data, we now expect output to only rise 2% across 2021. The economy is unlikely to recover much in Q2 as cases are close to record highs and calls for a nationwide state of emergency growing. Moreover, only 4% of the population has received at least one dose of the vaccine so far. However, we still think there will be a strong recovery from mid-Q3. While distortions in the number of tests conducted during and since the Golden Week holiday period make it difficult to draw definitive conclusions, daily cases have been falling in recent days. Encouragingly, new infections have fallen sharply in Osaka and Hyogo since states of emergency were declared in those prefectures three weeks ago. As the first prefectures where the UK variant took hold, Osaka and Hyogo should be ahead of the nationwide curve. And the vaccine rollout is accelerating. A record 483,328 jabs were administered on Monday.
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