High frequency data suggest that the Delta wave resulted in a renewed weakening in consumer spending in recent weeks. And given that the government this week extended the state of emergency in the largest prefectures to end-September, we’ve pencilled in a drop in consumption across Q3. However, new virus cases are now plunging, which should ease pressure on the medical system. What’s more, nearly half of the population is now fully vaccinated and the government indicated that it will ease restrictions by November even in prefectures under a state of emergency. The upshot is that consumption should rebound strongly in Q4.
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