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Recovery in industrial activity will run out of steam

Japan’s car industry has rebounded quickly from the disruptions caused by Delta waves across South-East Asia a few months ago. But amidst persistent supply shortages, output hasn’t quite returned to pre-pandemic levels yet. Omicron may create additional strains on supply chains and will also result in a renewed drop in consumer spending this quarter. The upshot is that following a strong post-vaccination bounce in Q4, GDP growth is set to slow sharply this quarter.

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