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The Japan government is to forecast for the years 2020/21 a real Gross Domestic Production contraction of around 4.5%, according to the Nikkei.

The recent surge in new COVID-19 cases in Japan’s major prefectures is roiling the outlook for the economy after it had seemingly passed through the worst of the pandemic.

“We have seen a spike of infection cases mainly in Tokyo. I’m concerned this will impact people’s consumption to a certain level,” said Shinichiro Kobayashi, economist at Mitsubishi UFJ Research and Consulting Co.

The state of emergency imposed from early April to late May ravaged the domestic economy. In those two months, spending by households with at least two people fell by 11.1 percent and 16.2 percent year on year, respectively, both record highs.

However, due to the nation’s surplus current account, investors remain keen on the yen which acts as safe haven at time of uncertainty, 

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