The day at a glance | December 31, 2020

The Top

·     Recovery in China shows signs of having reached its peak in December. 

·     Tax revenues increased 7.6% annually during November: SHCP. 

·     US Senate stops bill on $2,000 checks for American citizens.

·     US slaps tariffs on French and German wine and aircraft parts amidst a dispute regarding subsidizing aircraft manufacturers. 

Economic environment

China`s PMIs showed signs of stabilization during December after seeing constant acceleration in previous months. The official manufacturing indicator slowed down to 51.9 (vs 52.1 prev.) after having recorded strong expansion in previous months, mainly boosted by exports. The non-manufacturing index fell to 55.7 (vs 56.3 prev.). The indicators still show signs of expansion in the economy, even though at a more moderate rate. Manufacturing activities recorded their greatest monthly setback since May and the slowdown in December could be linked to some COVID-19 outbreaks in the country and the world, which moderated the strength seen in exports and domestic consumption; but it also responds to seasonal effects as construction projects were suspended due to cold weather. Nevertheless, the industrial sector, which led the Asian economy`s strong recovery in 2020, continues to show resilience amidst the virus`s second wave at a worldwide level; as services maintain a remarkable rate of recovery. Forecasts expect the Chinese economy to be the only one to record growth in 2020 (2% e.) and the central bank has announced that it plans to gradually pull stimuli implemented to fight the crisis triggered by the pandemic. The main concern continues to be the labor market, which remains fragile as employment sub-indices have been in contraction for the last 6 months and wages have logged little growth, which will limit the recovery seen in consumption. 

Mexican Finance Minister Arturo Herrera assured that Mexico will close 2020 with healthy levels of public finances. The latest figures regarding the public sector`s income showed a (-) 5.4% real, annual setback for the January-November period. The decrease was not as large as initially expected because of a 0.1% annual increase in tax revenues for the same period (7.6% annual in November). According to the Ministry of Finance and Public Credit (SHCP for its initials in Spanish), this responds to the improved legal framework, which increased the efficiency of tax collection; even though non-tax revenues also played an important role by increasing 38.9% compared to 2019 because of the extraordinary use of stabilization and trust funds. Onwards, the challenges to maintain finances healthy will be considerable as access to extraordinary funds has become more limited and the recovery in Mexico and Latin America`s economy after the pandemic will be some of the slowest at a global level.

Facebook Comments