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Japan
Abstract:GDP likely contracted very sharply in Q2 2020 as household and business spending fell amid the state of emergency in effect from April to May. While we expect growth to bounce back in Q3 as activity and spending regain lost ground, the subsequent recovery will likely be very gradual as external demand stays weak and concerns over the virus linger. A renewed pick-up in infections and a return to restrictions on activity are downside risks. We forecast GDP to shrink 6% in 2020, before growing 2.8% in 2021.
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