The Day at a Glance | November 11 2022

The Top

*China announces eased COVID-19 restrictions, a possible sign of a gradual discontinuation of the “zero COVID” policy.

*Industrial production in Mexico receded during September (-0.2% m/m; 3.9% annual).

*The European Commission acknowledged that a recession in Europe has begun: growth in 2023 is forecasted to set at 0.3% and the Commission warned that inflation will last for an extended period of time. 

*Control of US Senate still undecided; Republicans lead slightly.

*The Dollar (DXY) is on its way to log its worst week since 2020; yesterday, it logged its worst setback since 2009.

*Saudi Minister of Energy, Abdulaziz bin Salman, assured that OPEC+ will continue withholding crude oil production.

Economic environment

COVID-19 in China. Chinese authorities have decided to ease COVID-19 restrictions in the country. The changes include reducing quarantine time windows by two days for people who have caught the virus, people that have been in close contact, and international travelers that enter the country; with this, quarantines will go down from 7 to 5 days. Also, authorities have withdrawn sanctions and penalties for airlines that bring in infected people into the country, with which the sector could have more incentives to resume flights. This is the greatest change in COVID-19 restriction policies since the start of the pandemic, and for many, this is the first step towards optimization regarding prevention and control measures – not an easing of restrictions. Chinese assets have had a rally and oil logged an increase in light of the news, which could lead to the Chinese economy`s reactivation as these measures could be an inflection point in the government`s aggressive “zero COVID” policy. The easing of measures was carried out even despite the fact that COVID-19 cases in China logged an increase and are at their highest levels since April: Record figures are being logged in cities like Peking, Zhengzhou, while quarantines are still in force in Guangzhou. China`s National Health Commission assured it will focus its efforts on speeding up the vaccination process in the country, which is essential before the country`s total reopening takes place.

Industrial production in Mexico receded. After logging a stagnant figure in August, industrial production in Mexico recorded a setback during September and decreased (-) 0.2% on a monthly basis. At an annual rate, the sector`s growth set at 4.3% annual in light of a low comparable base. Mining (-1.2% m/m), utilities (-0.6%) and manufacturing (-0.3%) activities logged decreases during the month; only construction logged growth (0.2%). With this, the sector that led the economy`s recovery after the pandemic lost its momentum. The services sector has now taken the lead and is the main driver for growth in Mexico`s economy.