The way it's (not) going for Japan, recent upgrades to its 2021 economic growth made by the OECD and the International Monetary Fund might need to be toned down or even reversed to a downgrade at their next outing.
The OECD's March 2021 "Interim Outlook Forecasts" has Japan's GDP growing by 2.7% this year - up from 2.3% it forecast it December - and 1.3% in 2022 - up from 1.0%. Similarly, the IMF's April 2021 "World Economic Outlook' report sees Japan's economy growing stronger - 3.3% in 2021 and 2.5% in 2022—compared with the 3.1% and 2.4% it projected three months earlier.
To be sure, recent improvements in the au Jibun Bank Japan PMI readings back up both institutions' optimism. But improving as they are, the latest survey showed that overall private sector activity - as measured by the composite PMI - remains in contraction (for the 14th straight month) and at 49.9 in March, only marginally from February's 48.2.
The emerging fourth wave of coronavirus infections in Japan is to blame. Worldometer.info data shows that after dropping to around 1000 per day in early March from peak of more than 6000 daily infections in January, the seven-day average of daily new cases have increased to around 2500 in early April.
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Will Japan declare a third state of emergency to contain the brewing fourth wave of infections? And what happens to the Tokyo Olympics - cancelled in 2020 and expected to proceed three months and some change from today (23 July 2021)?
Although transient, Olympics country hosts benefit from increased travel and tourism and broadcast rights to events. These are magnified through the "feel good factor" and sense of pride that accrues in the domestic economy.
But even if the 2021 (from 2020) Olympics proceed as scheduled, caution over contracting the coronavirus would limit international and domestic attendance. Osaka has already cancelled the torch relay because of rising infections there.
The Olympics aside, Japan remains in dire straits. Household spending dropped by 6.6% in the year to February, accelerating from the 6.1% fall recorded in the previous month with Mr. and Mrs. Miyagi further reducing their spending on food (-4.2% in February from -2.2 percent in January), transport and communication (-13.0% from -3.5%) and medical care (-6.7% from -5.7%).
This is a perfectly rational response given the persistent decline in wages. While they've improved over the past three months, Japan's average monthly cash earnings remained 0.3% in the year to February.
The Bank of Japan (BOJ) kept monetary policy settings unchanged at its March meeting and despite its optimism, declared that "the current monetary easing should be continued for a long time".
Or it could ease even more.
Read our full COVID-19 news coverage and analysis here.