EU economy to rally in second-quarter as vaccine roll-out accelerates - EU. Europe’s economy is likely to rally in the second quarter as an acceleration in Covid-19 vaccine roll-out allows governments to gradually lift restrictions, the European Commission said in its interim Winter forecast. The currency bloc’s economy is expected to grow at a rate of 3.8 percent this year, instead of 4.2 percent projected in the autumn forecast. However, the outlook for 2022 was lifted to 3.8 percent from three percent, citing the start of mass vaccination campaigns. The eurozone economy contracted by 0.7 percent quarter-on-quarter in the last three months of 2020 and economists expect it will shrink again in the first quarter of this year.
US consumer prices rise fuelled by spike in petrol prices. US consumer prices increased firmly in December underpinned by a surge in the cost of petrol, although underlying inflation remained tame as the economy battled with the Covid-19 pandemic, which has weighed on the labour market and the services industry. The Labour Department said on Wednesday that its consumer price index rose by 0.3 percent in January after inching up by a revised 0.2 percent in December. Economists had expected consumer prices to go up by 0.3 percent compared to the 0.4 percent increase originally reported for the previous month. Petrol prices soared by 7.4 percent in January after jumping by 5.2 percent in December. Some economists believe inflation will breach the Federal Reserve’s inflation target of two percent this year, citing nearly $900 billion additional pandemic relief approved by the government in late December.
UK economy suffers 9.9% fall in 2020. UK gross domestic product (GDP) contracted by 9.9 percent last year, marking the largest annual fall on record, data from the Office for National Statistics showed. However, GDP grew by one percent in the fourth quarter of the year due to recovery in government consumption and business investment as Covid-19 restrictions were relaxed. That followed 16.1 percent growth in the third quarter. Despite the two consecutive quarters of impressive growth, the level of GDP in the UK is 7.8 per cent below the level recorded in the fourth quarter of 2019. Tej Parikh, chief economist at the Institute of Directors, said the record drop in economic activity last year “underscores the challenging road ahead”.
UK housing market slowed at start of year, Rics survey showed The UK housing market slowed at the start of the year, with new property listings, buyer enquiries and sales all falling in January, according to a survey. A survey by the Royal Institution of Chartered Surveyors (Rics) showed the market slowing markedly despite being allowed to stay open during the country’s third national coronavirus lockdown. The monthly survey found that a net balance of minus 28 percent of chartered surveyors reported a decline in new buyer enquiries in January, ending a seven-month run of rises and signalling a drop-off in demand. Many estate agents and surveyors said they expected the looming end to temporary stamp duty and land tax holidays across the UK to hit sales in months to come.
China’s inflation divergence shows growth imbalance. China’s producer prices rose for the first time in a year in January while consumer prices posted the first decline in a more than a decade, highlighting the economy’s unbalanced recovery. Rising commodity costs drove up producer price inflation to 0.3 percent last month, matching forecasts, the first gain since January 2020, data from the National Bureau of Statistics showed this week. On the other hand, the consumer price index fell 0.3 ercnet last month from a year earlier, with the core measure, which excludes volatile food and energy costs, declining by the same magnitude. The diverging paths of the two inflation measures reflect China’s uneven economic recovery from the coronavirus pandemic.