The Day at a Glance | February 2 2021

The Top

· The European economy contracted less than expected in the 4Q20 (-0.7% vs -0.9% e.); another contraction is expected in the 1Q21.

· AMLO presents a reform change the Electricity industry Law in order to give the CFE priority to transmit electricity to private companies; it`s feared that this will cause higher prices among services and controversy with the USMCA.

· Democrats prepare to discuss fiscal stimulus in the US Congress; it could be approved by simple majority this month.

Economic environment

The latest growth figures in the Euro zone confirmed a (-) 0.7% contraction in GDP during the 4Q20. The contraction was slightly smaller than that expected by the analysts` consensus (-0.9% e.), even though it`s expected to have deepened in the 1Q21 due to stricter measures implemented in efforts to contain the virus`s spread. At an annual rate, the Eurozone`s contraction set at (-) 5.1%. The economies that recorded the largest contractions were France (-1.3% quarterly) and Italy (-2%), while Germany (0.1%) and Spain (0.4%) logged growth. According to the Eurostat, the total drop in activity in 2020 set at (-) 6.8% in the Eurozone and at (-) 6.4% in the European Union; the largest historical contraction for both blocks since records exist (1995). Even though several economies are expected to enter a recession in the 1Q21, quarantine measures have been less strict, manufacturing activities have rapidly adapted to the environment and recovery is expected to accelerate in summer of 2021.