While economic activity appears to have held up well so far in Q2, daily cases are close to record highs at the nationwide level. Indeed, the government is today set to announce an extension of the state of emergency until the end of the month that will include more regions of the country. As such, we expect activity to weaken over the coming weeks and continue to forecast a stagnation in GDP this quarter. And while we remain bullish on Japan’s recovery prospects in the second half of the year, if inoculation numbers don’t pick up this month in line with the scheduled surge in vaccine deliveries then we’ll be forced to revise down our upbeat forecasts.
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