With the new strain of the Coronavirus causing concern across the world, many countries that continue to battle the Coronavirus hope that the vaccine gives them a head start before the strain does any more damage. This week will also see a new President take office, Democrat Joe Biden, on the 20th January US Local time. Here is your week ahead.
It seems like China was on their home run. Cases were initially squashed due to their strict lockdown earlier in 2020. The vaccine's advancement last year was the final factor in cementing China's success against the virus. However, a sharp outbreak in Nangong and Shijiazhuang shows the world that no matter how well your initial response is, only continuous and strict restrictions can keep the Coronavirus out of the community. Five days ago, a plot of land in Nangong, Hebei, laid flat. Now, it has become a 1500 room hospital for Covid-19 patients.
This may be an overreaction by the Chinese government – however, they may just be preparing for the worst. This does give a sign of what the future may hold for countries like the United Kingdom and the United States, where cases are still at record highs. With that said, GDP and Retail Sales are predicted to increase on the back of a boost in the manufacturing sector alongside consumer spending the income they saved during the past lockdown. GDP is expected to rise to 6.1% in Q4, up from 4.9% in the previous quarter. Furthermore, retail sales are predicted to grow. 5.5% in the month of December, ahead of Chinese Near Year.
The Coronavirus situation in many countries highlights the importance of implementing a strict lockdown and following it through. The benefits of a lockdown only work if community transmission is eliminated. However, many countries apart from a small handful tried to balance economic damage alongside the Coronavirus spread, which meant deescalating Coronavirus restrictions too early, rendering the lockdown useless.
Germany is one of the nations that deescalated too quickly, causing massive spikes in their Coronavirus figures. Their total cases now stand at 2.04 Million, with German Chancellor Angela Merkel urgently trying to rush in more stringent restrictions to dampen the virus's spread. However, the recent spike is unlikely to affect analysts' expectation of Germany's CPI,s expected to print at -0.7% for the month of December, the same as a month before.
With just under 3.6 Million initial doses having been handed out to the UK public, the United Kingdom's dire situation looks like it's starting to make a turnaround. The daily Coronavirus rate has slowly decreased in the past couple of days - however, Britons do not seem to be adhering to lockdown and social distancing rules.
The third lockdown in the past 12 months, UK citizens have been seen gathering around beaches with no mask on. The UK government is banking on the vaccine to help control the virus's spread, as hospital beds continue to be filled with Coronavirus patients. The CPI is expected to rise by 0.5%, up from 0.3% a month before.
Canada seems to be avoiding the limelight – however, their Coronavirus cases are continuing to skyrocket after a semi-successful, non-strict lockdown. However, like all countries that did not eliminate community transmission, their cases soared as the latter part of 2020 approached. Coronavirus cases in Canada surpassed 700,000 yesterday.
This may well play into their interest rate decision this week ahead. With the second wave all but destroying any optimism in Canada's economic recovery, analysts predict a rate cut of less than 0.25%, currently at 0.25%. Andrew Kelvin, Chief Canada Strategist at TD Securities, stated that "The fact that the Bank of Canada has kept the door open to ( a rate cut) in the recent month hasn't gone unnoticed by markets."
The news many Australian citizens wanted to hear – "There are no remaining hotspot definitions," Federal Health Minister Greg Hunt stated at a press conference, with only one community transmission in the past couple of days. However, he warned that their not out of the woods yet, stating that "invevitably, there will be days of new cases. There will be days where there may be a requirement for Commonwealth hotspot definition to be reintroduced. But they'll be done on a the basis of that, and cases". This may indicate that Australia is finally able to start its economic recovery – alongside the implementation of the Trans-Atlantic bubble between Australia and New Zealand. Employment Change is expected to decrease from +90,000 in November to +50,000 in December.
Similar to Canada, Japan did not implement a proper lockdown. Instead, they opted for an increase in social distancing measures alongside confidence in their citizens to continue to wear face masks. Just like Canada, initial results were promising. However, as the year passed, it was evident that community transmission is inevitable if it was not thoroughly squashed out. Currently, Japan sits on 325,000 Coronavirus cases, with daily cases reaching an all-time high of 8,000 just a couple of days ago. With negative rates in Japan, monetary policy moves to the downside are rare as not to dig a hole the Bank of Japan can not come out of. Chances are, the BoJ will opt for other tools for yield control, such as asset purchases. However, analysts at Bloomberg Economics forecast the BoJ to keep rates as is not only this week ahead but for the whole year.
Busy week ahead. Trade safe, and most importantly, stay safe.