Japan is experiencing a troubling fifth wave of COVID-19, with high daily cases driven by an outbreak of the Delta variant. The rising cases have forced Tokyo, along with several other prefectures, to declare a state of emergency once again, and officials have banned ban all spectators from attending the Olympic games in person.
Our View
The government’s handling of the pandemic and its decision to carry on with the Olympics have led to widespread frustration among Japanese voters and poor approval ratings for the prime minister. (Yoshihide Suga’s approval rating recently fell by 9 points to an abysmal 34%, the worst score for a Japanese PM in nine years.) To garner voter support ahead of the elections in Japan, the government is likely to pass another stimulus package in the next two months that is focused on supporting low-income individuals and businesses that were most affected by the pandemic.
Business Implications
Consumer confidence and business sentiment among retailers will remain subdued for the next 2–3 months. The service sector will continue to struggle through Q3. B2B firms involved in these sectors in Japan should anticipate decreased demand until vaccination levels pick up. Firms should also align with their local teams on expectations for the stimulus.
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