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EcoWeek

    EcoWeek of 17 May 2021
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    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. 
    Our barometer shows a marked improvement in France’s economic situation in recent months compared to the three previous months. Yet the improvement is helped by a very favourable base effect. In April 2021, the base effect should be favourable again, despite another lockdown.
    After disappointing Q1 GDP figures – which showed the economy contracting again, by 0.5% q/q – the second quarter should bring the start of the much-anticipated recovery in Spain. The improvement in the Covid-19 situation is continuing to have a knock-on effect on business and consumer confidence, which brightened again in April, as shown by our pulse.
    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%).
    EcoWeek of 10 May 2021
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    The ‘great inflation’ of the 1970s had many causes. The policy objective of full employment had already led to high inflation by the end of the 1960s. Two oil shocks and the depreciation of the dollar caused additional increases. The key factor was monetary policy, which was not adapted to the circumstances. It reflected the view that the Fed did not have a mandate to tolerate the sizeable increase in unemployment that might have ensued from the aggressive tightening needed to bring inflation under control. In addition, inflation was considered to be a cost-push phenomenon that could be addressed with wage and price controls. Today’s situation is very different. The Federal Reserve is an independent central bank and inflation expectations are well-anchored. However, letting the economy run hot is reminiscent of the 1960s. Should inflation be above target for too long, the Federal Reserve will need to have the courage to tighten policy sufficiently despite the potential cost to the economy.
    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 vaccine keeps its promises, so does Joe Biden. With USD 400 bn in stimulus checks nearly in pockets and partial immunity achieved against Covid 19, Americans are on the move to spend again. After a record-breaking month of March, private consumption surged by more than 10% (seasonally adjusted annual rate, saar) in the first quarter. GDP rose 6.4% (saar) and will continue to accelerate in the weeks and months ahead.
    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.
    EcoWeek of 03 May 2021
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    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. However, empirical research shows that the impact on productivity largely depends on factors such as the IT infrastructure, employee preferences and the way it is introduced and accompanied by company management.
    The credit impulse declined sharply in the eurozone in March 2021, reflecting the fall in the annual growth of loan outstanding, although this resulted from a high base for comparison and was therefore widely expected. Moves by eurozone governments to introduce support measures for companies’ financing led to exceptionally strong growth in bank lending to non-financial corporations from March 2020 onwards.
    The German statistical office Destatis estimates that economic activity shrank by 1.7% in Q1 2021 after robust growth in the second half of 2020 (8.5% in Q3 and 0.5% in Q4). This was largely due to the tightening of the Corona restrictions in mid-December, which has been a drag on private consumption.
    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.

On the Same Theme

Serendipity lost? Working from home and innovation 5/17/2021
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. 
Covid-19 : Fall in number of new cases worldwide 5/17/2021
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%).
PMI:Rising price pressures 5/10/2021
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.
Covid-19: India reaches more than 20 million cases 5/10/2021
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.
Record new infection numbers globally 5/3/2021
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.
Retail and leisure footfall is improving 4/26/2021
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). 
How to spend it? Shifting consumption patterns and Covid-19 4/19/2021
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. 
Uncertainty: Trending lower 4/19/2021
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.
Retail and leisure footfall declines in Europe 4/19/2021
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 and climate change 4/12/2021
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. The outcome of the review should be announced in September 2021.

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