• Globally there were over 85 million confirmed Covid-19 cases at the start of January and over 20 million in the United States alone.
• Democrat wins in the Georgia runoff election will give the incoming Biden administration more flexibility with economic policy and the structure of further stimulus.
• Stricter lockdown measures were implemented throughout Europe, including the move to tier 5 restrictions in England as the UK prepares for its vaccine rollout.
• US-China relations deteriorated as the US began enforcing new visa restrictions on Chinese party officials and investment bans on companies with Chinese military links.
• The RBA minutes for the December meeting revealed the board believes it will take some time for output in Australia to reach its pre-pandemic level.
Prime minister Morrison said “Australia should not be at the front of the queue” when it comes to vaccines given the relative success of Australia’s containment measures and the more pressing need in other countries to bring the virus under control. An agreement between the Australian government and Pfizer was finalised on Christmas Eve, with 10 million doses to be made available for a March rollout if the vaccine is approved by regulators.
The global economy continues to recover as investors weigh the impact of further lockdowns against the optimism of vaccine rollouts and fiscal support. Covid-19 cases are still rising in the US and Europe and the distribution of vaccines are not expected to bring an immediate end to social distancing.
A projected victory in the two Georgia Senate runoff elections has handed Democrats control of Congress and the White House, raising the prospect of higher taxes and big spending on a third coronavirus package.
The UK has been inoculating people with the Pfizer vaccine on an emergency basis and became the first country in the world to start deploying the AstraZeneca vaccine.
The Chinese economy continues to power along. Industrial production improved 0.1% to an annual rate of 7.0% in November and in line with expectations, boosted by fiscal stimulus measures, while year-on-year retail sales rose 0.7% to 5.0% (versus 4.4% expected).
Japan’s September quarter GDP was upgraded from an annualised real 21.4% to 22.9%. Private consumption, which accounts for more than half of Japan’s GDP, was revised from a drop of 4.7% to a sizeable rebound of 5.1%.