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China Is the Only Major Economy Expected to Have GDP in Positive Territory in 2020

Source: Euler Hermes, “Coping With COVID-19 in Differing Ways”

China is tracking toward 1.5% growth in GDP for 2020 (2019: 6.1%) — despite the global disruption coronavirus has inflicted on its economy. It is the only major economy expected to maintain a positive GDP this year, according to research by Euler Hermes.

China’s GDP growth is expected to reach 7.6% in 2021, the highest growth rate among the major economies. The U.K., whose lockdown mandates have been longer and more severe than many other countries, shows a significant drop in GDP for the year — 13.3%, but it is expected to rebound with GDP at rates ahead of Germany and the United States. 

The report warns of “false restarts” if second waves crop up and notes that a return to pre-crisis GDP levels should be seen in China and the U.S. by the end of 2021. Due to the extent of the crisis in Europe and the “more limited stimulus response,” Europe isn’t expected to reach its pre-crisis levels until 2022-2023.

Spain’s Supply of Rental Homes Jumped 52% in One Year

Source: Brookings Institution

Spain now has one of the lowest rentership rates compared to European countries, with 23% of households renting their homes. Around 70 years ago, renters made up half of the housing market, according to Brookings Institution. Now, of the 18.6 million households in Spain, fewer than one in four contain renters.

Over the last 20 years, the number of renters in Spain had actually been gradually increasing due to job insecurity and caution around banks granting mortgages. But the COVID-19 pandemic caused rental prices to drop significantly — marking the first drop since the 2009 financial crisis. Brookings states that “the supply of rental homes in Spain increased 52% ​​between September 2019 and September 2020.” 

Similar to other countries, Spain saw a loss of interest in renting during the pandemic — reflecting a decline in tourism and people’s growing desire to relocate to cheaper areas and have more space. The Spanish government responded with policies for “mortgage payment moratoriums, rental assistance and the suspension of evictions for vulnerable families,” notes Brookings.

Digital Exhaustion Threatens the New Hybrid Workplace

Source: Microsoft Work Trend Index survey

Time spent in meetings and chats per person spiked in 2020 and continues to grow. The number of meetings hosted in Microsoft Teams more than doubled — up 148% — as of February 2021, compared to the same time last year. Email communications to commercial and education customers also increased to 40.6 billion, compared to 12.4 billion at the start of COVID-19, according to the Microsoft Work Trend Index.

Many employees reported experiencing digital exhaustion — with 54% of survey respondents feeling overworked and 39% feeling exhausted. “The shared vulnerability of this time has given us a huge opportunity to bring real authenticity to company culture,” Microsoft employee, Jared Spataro says. When employees feel they can bring their whole selves to work, it can actually spur productivity and attract talent, according to Microsoft.

Moving forward, Microsoft recommends five strategies to help business leaders successfully shift to hybrid work: promote flexibility, invest in space and technology, prioritize addressing digital exhaustion from the top, rebuild social capital and culture and rethink employee experience to attract top and diverse talent.

Foreign Aid Is at a Record Peak, But Is It Enough?

Source: Organization for Economic Co-operation and Development (OECD)

Foreign aid rose to an all-time high of $161.2 billion last year, a 3.5% increase from 2019. In many cases, larger economies directed these funds to countries in need of significant help to respond to the short-term impacts from the COVID-19 pandemic, according to the OECD. 

An OECD survey shows that the foreign aid supported health systems, humanitarian aid and food security. However, OECD Secretary-General Angel Gurría added that there will need to be “a much greater effort to help developing countries with vaccine distribution … to build a truly global recovery.” 

Internationally, governments approved $16 trillion worth of COVID-19 stimulus measures, but only 1% was used to help developing countries handle the virus. Trade, foreign direct investment and remittances in developing countries have also declined as a result of the pandemic, intensifying their need for support.

Why Are Central Banks Creating Digital Currencies?

Source: Atlantic Council

Nineteen countries have started to test a central bank digital currency (CBDC) on a small-scale with a limited number of participants. The Atlantic Council defines CBDC as “the digital form of a country’s fiat currency that is also a claim on the central bank.”

As of today, the People’s Bank of China (PBOC) and the European Central Bank (ECB) are prominent players in the digital currency realm. The United States currently lags behind in the research phase, yet the Federal Reserve has expressed continued interest in the digital dollar.

As digital currencies expand globally, there are challenges ahead — the legal, political and regulatory properties of CBDCs remain unclear. But the IMF notes that there are also multiple benefits to having government involvement in digital currencies, including lower cash transfer costs, greater accessibility to banking services and easier implementation of monetary policies. 

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