The Day at a Glance | January 18 2021

The Top

· Growth in China exceeds estimates in 2020.

· Greater growth in the US is forecasted after the Biden administration`s aggressive stimulus program and spending (6.6% e. for 2021).

Economic environment

China`s economy once again grew in the 4Q20; it did so at a similar rate seen prior to the pandemic. The Asian economy grew 6.5% annually (2.6% quarterly) in the last quarter of the year and 2.3% in 2020; an extraordinary recovery boosted by having control over the virus and fiscal and monetary stimuli. It`s forecasted that China will be one of a few of the world`s main economies to record growth in 2020, even though the 2.3% rate is the lowest in four decades. China is expected to grow at an 8.2% rate in 2021 as the worldwide recovery continues. However, for this to be achieved, China must maintain control over the virus`s outbreaks in the country and consumption must recover at a faster rate in order to enhance the reach of government spending. This last factor rises concerns as consumption per capita fell 4% in 2020 and the slow rise of wages after an important setback triggered by the pandemic could imply a slower recovery in this criteria. Industrial production (7.3% annual Dec., 2.8% 2020) and investment (2.9% 2020) led the economy`s recovery, driven by the government`s strong spending; but retail sales closed the year in negative numbers (-3.9% in 2020), a sign that there is still room for recovery regarding consumption in 2021. It`s feared that China`s relationship with the US will be another factor that could hinder recovery this year.