The Covid-19 pandemic continues to slow around the world. As health protection measures are gradually relaxed, footfall to retail and leisure facilities continued to rise in the main developed economies.
World trade in goods has rebounded very strongly, even though major divergences exist between regions due mainly to widely contrasting health and economic situations. The turnaround in services exports has been much slower, with transport and tourism still holding at very low levels. Trade in information and communication technology (ICT) services was much more resilient in 2020. Brexit triggered a sharp increase in the number of new trade agreements in 2021. Two major trade agreements negotiated by the European Union are still pending, one with Mercosur and the other with China. Negotiations between the United States and China are also at a standstill after the failure of bilateral talks held in Alaska in mid-March.
Working from home is expected to have a positive impact on the level of productivity but will it also influence its growth rate? The answer largely depends on what happens to innovation. Interaction between people is key for idea generation and the exchange of information. Formal interaction can be easily organized using a variety of software applications but informal interaction is a bigger challenge. To make sure that serendipity within and amongst teams – given its importance for a culture of innovation – is maintained, a combination of working from home and onsite seems to be recommended.
According to the latest figures from Johns Hopkins University, 5.5 million new Covid-19 cases were recorded around the world in the week of 4-10 May, a 12.5% drop from the previous week. This fall was seen in Europe (-16.5%), Asia (excluding India, -14.5%) and the Americas (-6.3%).
Sentiment in the manufacturing sector improved further at the global level, driven by better numbers in the majority of advanced economies – where very high levels have been reached – whereas the picture is mixed in emerging countries. Nevertheless, in this part of the world as well, the PMIs are above the 50.0 mark, with the exception of Mexico.
The situation in India continues to deteriorate with 382,146 new Covid-19 cases reported on 4 May alone, which has lifted the total to more than 20 million cases since the beginning of the pandemic. In Asia (excluding India), Europe and the Americas, the number of new cases continues to decline.
One of the lasting consequences of the Covid-19 pandemic will be the way we work with more time spent on working from home compared to the pre-pandemic situation. Clearly, the possibility to do so depends to a large extent on the industry, the nature of the job but also the country. These developments would have profound implications on where people decide to live, the role of cities, the need for office space, the use of means of transport, the needs in terms of IT infrastructure (high-speed internet), etc. A priori, one would expect a positive impact on productivity, in particular due to increased worker satisfaction and efficiency. Based on recent surveys, that is also what companies seem to expect
The Covid-19 pandemic continues to set records, with 825,721 new infections recorded on 28 April alone. Much of this surge has occurred in India, where there were 349,378 new cases, or 42% of the global total, whilst in the rest of Asia, Europe and the Americas we have seen a fall in the number of new cases over the past few days.
In the retail and leisure sectors, which are still hit by health restrictions, footfall improved in developed countries during the week of 9-16 April compared to the previous week, especially in the UK, which reported a big improvement in footfall (from -51% to -34% compared to the baseline*). This can be attributed to the reopening of bars and restaurants on 12 April. Footfall also improved in Italy (-51% to -40%), Germany (-47% to -40%) and Belgium (-43% to -38%). In France, footfall increased very slightly and is still the lowest in Europe (chart 3).
The Covid-19 pandemic is having a profound impact on household expenditures. The volume has dropped and its composition has changed significantly. As restrictions are gradually lifted, services such as recreation, food services and accommodation, which have seen a big reduction in demand due to the restrictive measures, could thrive, to the detriment – at least relatively speaking – of spending on goods. For the strength of the early phases of the recovery, pent-up demand is an important factor. It plays a smaller role in the services sector, which could mean that countries with a larger services sector not only have suffered more from restrictive measures but could also face a bigger challenge during the recovery.
Most of our uncertainty indicators continue to decline on the back of vaccination campaigns that pick up speed and better economic data, although in several countries the number of new infections is again rising strongly. Starting top left and moving clockwise, the number of references in the media to uncertainty, after declining very strongly in recent months, has now more or less stabilized.
Faced with the resurgence of the pandemic, retail and leisure footfall declined in the developed economies, especially in Europe, during the week of 4-11 April. Moreover, the OECD Weekly Tracker of annual GDP growth continued to decline in Europe.
Central banks have become increasingly aware of the impact of climate change on price and financial stability. Moreover, by accepting collateral or via asset purchases, central banks are taking explicitly climate risks on their balance sheets. At the European Central Bank, climate change has become integral part of the monetary strategy review launched in 2020. A major question is whether climate objectives should be pursued in the conduct of monetary policy. The fear is that it could be seen as “mission creep”. At a minimum, one would expect the ECB to ask for more disclosure concerning climate-related factors for assets held on its balance sheet. But the question to what extent market neutrality should be abandoned in favour of greener objectives is still open
In the manufacturing sector, with a few rare exceptions like Mexico, Egypt and Lebanon, virtually all the countries in our sample reported PMI above the 50 threshold in March 2021. Global manufacturing PMI rose to the highest level in the period under review. The same can be said for the Eurozone, where the index rebounded strongly again in March.
The global pandemic continues to worsen as the number of new Covid-19 cases continues to rise. In the week of 1-7 April, more than 4.14 million new cases were reported*, a 23% increase over the previous week. Increases were observed in Europe, Asia, excluding China, and the Americas, up 12%, 51% and 15%, respectively. In Europe, however, the growth rate of the new infections is on a declining trend over the past week.
In many countries the number of new Covid-19 cases has begun rising again, forcing governments to maintain or tighten health restrictions. This is the case for the Eurozone, among others, where a true rebound in growth and demand has been postponed yet again. The timing of the recovery will depend essentially on the effectiveness of restrictive measures and the acceleration of vaccination campaigns, but also on spillovers effects with some of its trading partners whose economies are picking up more rapidly. The United States is one such country thanks to its successful vaccination campaign and the enormous recovery plan that has just been launched. America’s influence is not limited to providing greater opportunities for European exporters
Since the Great Recession, the monetary base in several advanced economies has seen a considerable increase, driven by the creation of bank reserves at the central bank. Yet, contrary to what had been observed in previous decades, this has not been followed by a significant pick-up of inflation. Following the global financial crisis, the demand of the banking system for central bank reserves increased a lot. This was a reflection of the dire state of the economy and money markets as well as tighter liquidity requirements. Subsequently, quantitative easing caused an increase in reserves on the initiative of the central bank
Indicators of the strength of the Covid-19 pandemic have continued to rise around the world. With the resurgence of the epidemic in many countries, the gradual tightening of health measures has affected individual mobility...
In recent months, purchasing managers in the euro area and the US have reported a significant increase in input prices as well as longer delivery lags. They reflect the next stage of the disruptive impact of the pandemic with supply struggling to meet the pick-up in demand. According to an Atlanta Fed survey, firms experiencing the most intense disruption tend to be those with the highest expectation of future inflation. It remains to be seen whether this will convince them to raise prices. The Federal Reserve is relaxed about this but, nevertheless, there will be lot of nail-biting in the second half of the year as US inflation data are released in an economy that should be able to close its output gap quickly.
According to data from Johns Hopkins University, the number of Covid-19 cases worldwide continues to rise. In spite of a poor health environment, the OECD Weekly Tracker of year-on-year GDP growth continues to improve. This indicator is based on Google Trends resulting from queries on consumption, the labour market, housing, industrial activity as well as uncertainty...
A deterioration in the health situation is once again affecting consumer behaviour in certain European countries. According to the latest Google Mobility Report, visits to retail and recreation facilities have seen divergent trends in the main developed economies. In Italy, France and Belgium, where the number of Covid-19 cases has been rising again, footfall has fallen...
Based on an overview of the functions of a currency, cryptocurrencies should be considered as an investment instrument, rather than as an alternative to fiat money. Since the start of 2020, correlations between bitcoin and copper, equities and, in particular, breakeven inflation have increased. Probably, investors turn to bitcoin when inflation expectations are on the rise. Swings in investor sentiment also play a role. The extent of the change in the bitcoin price suggests that speculative waves are at work, driven by momentum buying and extrapolative expectations of price appreciation
The downward trend of our uncertainty indicators continues. This is related to the improvement of the sanitary situation in several countries, the vaccination campaigns and the anticipation of a major fiscal stimulus package in the US...
As the number of Covid-19 cases has been rising globally over the past two weeks, many countries have now joined the vaccination campaign that began in earnest in December 2020. According to the latest figures on Oxford University’s Our World in Data website, 319.56 million doses of vaccine have now been administered in 118 countries...
In the manufacturing sector, at the world level, the PMI recorded an improvement in February after having eased the month before. It is now at the highest level of the period under review. This also applies to the eurozone, where the index saw a big jump in February. The improvement in the French index was even more impressive, although its level is still below that of the eurozone...
