The government this week expanded state of emergencies to nearly all prefectures and consumers are responding to the surge in virus cases with renewed caution. We’ve therefore pencilled in a renewed fall in consumer spending this quarter. However, there are early signs that the Delta wave is peaking in Tokyo and we still expect a strong rebound in consumption in Q4 as the majority of the population will be vaccinated by then. Meanwhile, former Minister of Foreign Affairs Kishida Fumio will run against PM Suga in next months’ LDP leadership election but his chances of winning are slim.
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