The Day at a Glance | October 13 2020

The Top

· Chinese imports and exports continue to show a firm recovery.

· European leaders will debate on contingency plans amidst the possible failure of Brexit negotiations.

· Confidence regarding the German economy fell because of new COVID-10 outbreaks (ZEW 56.1 Oct. vs 77.4 Sept.).

· Economic indicators: Inflation in the US slightly accelerates, in line with estimates (1.4% annual, Sept.).

Economic environment

China`s domestic market gained strength during September. Trade balance data showed a 9.9% annual increase in exports during September, while imports greatly exceeded estimates with a 13.2% expansion. Exports linked four consecutive months of growth, with a firm foreign demand and a growing involvement of Chinese exports at a global level; despite tariffs implemented by the US and narratives about adjustments in global productive chains. Since the pandemic, Chinese exports have been boosted by the sale of medical and technological equipment. Meanwhile, imports have increased and point to the fact that the recovery in domestic demand is sustained and is starting to gain traction, especially regarding demand for automobiles. Nevertheless, it`s possible that the growth in imports can also be explained by the advanced purchase of technological equipment by Huawei as US sanctions to prevent it from acquiring this technology from companies in Taiwan, South Korea and Japan are about to come into effect.