Signs the recent surge in infections in the Osaka area is being driven by more infectious strains raises the risk of more draconian restrictions being needed to break the fourth wave of coronavirus currently forming. That poses the major downside risk to our optimistic near-term forecasts for the Japanese economy. Meanwhile, PM Suga indicated this week that he may call a snap election in the summer. We think such a gamble could pay off and breathe new life into Suganomics.
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