The Bank of Japan’s broad measure of consumption released today reveals an unprecedented collapse in services spending in April. That supports our below-consensus forecast that GDP will contract by 9% q/q this quarter. With the nationwide state of emergency now over, a tentative recovery in consumer spending is underway. However, as the renewed rise in coronavirus cases in Tokyo this week underlines, a full rebound in economic activity is impossible while the threat of another wave of infections remains.
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