J.P. 摩根-全球宏观策略之全球宏观数据观察-2020.12.31-63页

Economic Research
December 31, 2020
Global Data Watch

 Despite building second-wave drag, we raise our global growth forecast
because of firm data and US fiscal stimulus Contents
Global Economic Outlook Summary 4
 Regional and sectoral imbalances to remain wide despite strong growth
Global Central Bank Watch 6
 Turkey’s tightening restores credibility, should be reversed next year Now cast of global grow th 7
Selected recent research from J.P.
 Next week: December US employment stalls, global PMI moves up Morgan Economics 9
Data Watches
Wring out the old, ring in the new United States 10
Euro area 17
Incoming data point to stronger momentum into year-end, leading us to raise Japan 22
our current-quarter GDP projection in recent weeks—notably for the US and Canada 25
China. However, the second wave of the pandemic ravaging the Northern Mex ico 27
Brazil 29
Hemisphere is still expected to take a toll. Global retail sales looks to have
Argentina 31
contracted last month, and we believe Europe’s service sector is bearing the
United Kingdom 33
brunt of the shock. With the holiday season likely to sustain high infection Emerging Europe 35
rates into the new year, global growth is expected to moderate significantly in MENA 38
December and January. Consistent with this, we expect next week’s report to Australia and New Zealand 40
show US job growth stalling in December. China, Hong Kong, and Taiwan 42
Korea 45
Despite the near-term hit from the second wave of the pandemic, the 2021 ASEAN 47
outlook is improving. Widespread vaccination is moving forward and is ex- India 50
pected to sever the link between infection and mobility by midyear. At the Asia focus 52
Regional Data Calendars 53
same time, downside risks have been removed as a Brexit deal was reached
and a US fiscal stimulus package was passed. Combined, the stage is set for a
US- and European-led global growth rebound to take hold before the end of
the first quarter. We forecast global GDP to increase 4.9% next year, its fast-
est pace in over two decades.
Recent developments have raised growth forecasts, but we still look for the re-
covery to be incomplete by end-2021. We forecast global GDP to remain rough-
ly 2% below its pre-crisis level by 4Q21 and be accompanied by wide imbal-
ances. Regionally, China’s near V-shaped recovery and our increasingly upbeat
view on the US contrasts with continued downbeat expectations for high yield
EM economies (Figure 1). In this group, we expect GDP shortfalls from poten-
tial to average 5% at the end of next year. In most cases, the vaccination path is
expected to be slow while financial stability constraints generate tight fiscal
stances and limit offsetting monetary policy support. Sectorally, the large dislo-
cation generated by the pandemic is expected to persist as the service sectors
most affected by the pandemic (travel, dining, entertainment, and education)
remain depressed even as they rebound strongly as the year proceeds.
Figure 1: Real GDP deviation from potential Figure 2: US fiscal thrust, Brookings Inst. Bruce Kasman
4Q19=100 %-pt impact on real GDP growth, annualized rate (1-212) 834-5515
100 7.2 bruce.c.kasman@jpmorgan.com
4
China JPMorgan Chase Bank NA
98 US 3
2
96 1 Joseph Lupton
94 0 (1-212) 834-5735
EM high yield -1 joseph.p.lupton@jpmorgan.com
92 Euro area JPMorgan Chase Bank NA
-2
90 -3
88 -4 Michael S Hanson
19Q4 20Q4 21Q4 1H20 2H20 1H21 2H21 1H22 2H22 (1-212) 622-8603
Source: J.P. Morgan Source: Brookings-Hutchins Institute, J.P. Morgan michael.s.hanson@jpmchase.com
JPMorgan Chase Bank NA
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Bruce Kasman (1-212) 834-5515 Michael S Hanson (1-212) 622-8603 Global Data Watch
bruce.c.kasman@jpmorgan.com michael.s.hanson@jpmchase.com December 31, 2020
Joseph Lupton (1-212) 834-5735
joseph.p.lupton@jpmorgan.com
As these macroeconomic developments unfold, policy makers elsewhere. The upside for China from external demand is
will face the challenge of sustaining stimulus and targeted clear, but downside domestic risks are also present. The threat
supports through a period of strong growth and building fi- of rising non-performing loans have been a persistent source
nancial stability concerns. The decade following the Global of concern, and this year’s credit surge, combined with an end
Financial Crisis showed how insufficient stimulus and limited to regulatory forbearance measures introduced during the
burden sharing contributed to a subpar recovery and a set of pandemic, suggests that hidden credit problems are likely to
credit (EMU sovereign, EM corporate) and geopolitical after- surface. The recent wave of SOE bond defaults is similar to
shocks (Brexit and trade wars). While important lessons were the wave of private enterprise bond defaults in 2018. The
learned from this experience and are delivering positive poli- government thus needs to strike a fine balance between mar-
cy actions, next year’s policy reactions continue to pose a key ket discipline and preventing the spillover of risks. As always,
risk to completing the healing process: the more fundamental question is balancing the relationship
between government and market entities.
 US fiscal austerity postponed, so far. This year’s stunning
downturn was cushioned by an equally stunning degree of Externally, trade war risks will likely fade with the Biden
fiscal policy support. A key risk has been that fiscal policy administration, but not completely. China has been shoring up
would reverse too quickly as it did in 2011-15, stifling the trade deals in the region (RECP), but the US could renew its
recovery. The latest developments show US policymakers multilateral approach to containing China’s influence. China’s
wisely not repeating the same mistake and providing target- recent interest in joining the CPTPP is perhaps one way for
ed fiscal supports for households and small businesses. China to short-circuit these efforts and continue to grow its
However, the stimulus remains short-lived and Brookings influence in the region. How the US responds to these latest
estimates show that a significant US fiscal tightening is in developments in early 2021 will likely set the tone for the
the offing as we look toward 2H21 (Figure 2). trade war for the rest of the Biden administration. Disputes
over human-rights likely will remain a source of pressure.
 Low for long as a substitute for burden sharing. Bur-
geoning public and private sector balance sheets are the A multispeed recovery across Asia
legacy costs of the pandemic and a material medium-term
headwind to growth. This is particularly the case for higher- While global tech demand and firming global capex support
yielding EM economies that have limited space for policy the region broadly, the second wave of COVID-19 cases
support. In the face of their constraints, the commitment of globally is taking a toll elsewhere in Asia. In Japan, the
G4 central banks to sustain low-for-long rate policies amid pickup in COVID-19 cases is weighing on retail sales, which
strong growth and building financial stability risks will be fell 2%m/m in November. The government’s temporary sus-
an increasingly important indirect support for the broader pension of the travel subsidy program has prompted a large
healing of the global economy. number of travel cancelations during the New Year holiday
season. In Korea, domestic pandemic headwinds are out-
 The price of China’s success. The rapid recovery in the weighing the boost from robust external goods demand. The
global economy owes in large part to a stunning degree of November IP report modestly undershot our expectation, and
policy support from China. China fiscal policy boosted social distancing drags loom larger for December services.
GDP by close to 5%-pts this year and was amplified by an This week, we revise down Korea’s 4Q20 GDP growth fore-
equally impressive degree of monetary accommodation. cast by 1%-pt to 3%q/q, saar. However, with the positive
Having succeeded in generating a near V-shaped recovery news from the US and China along with signs of a sharp in-
we now anticipate a 3% of GDP fiscal tightening in 2021 as ventory de-stocking in November, we mark up the 1Q21 GDP
fiscal and credit policy normalizes. The annual Central outlook for Korea by 0.5%-pts to 3%ar. Growth is also getting
Economic Work Conference (CEWC), which concluded a lift from a front-loading of fiscal stimulus, including cash
December 18, confirmed a policy turn is in the offing but handouts to small businesses.
also emphasized there will be little tolerance for disap-
pointments as policy trades off macroeconomic and finan- More broadly throughout the region, cross-border travel re-
cial stability. mains a material drag. This should begin to turn as vaccina-
tion becomes more widespread in 2H21. But for those econ-
omies more geared to travel and tourism—Hong Kong, Sin-
A robust China not immune to risks
gapore, Thailand, the Philippines, and Malaysia—debt bur-
China policy normalization should dampen its growth toward dens on SMEs amid fading fiscal support will remain a threat
potential next year even as it benefits from strong growth even as the direct pandemic drags fade (Figure 3).
2
Figure 3: EM Asian exports, travel and transport services close the year, and our nowcaster point to upside risk to our
% of GDP, BOP basis already strong 7.5% 4Q GDP growth call (Figure 4). The re-
25
gional break between the virus and mobility may not be sus-
2019
tainable for long as new deaths have started to climb again in
20 2020 recent weeks, pointing to growing stress on health care sys-
15
tems. But the large economic costs of the virus leave govern-
ments with limited political will and fiscal space as they con-
10 sider restrictions.
5 Figure 4: Latam mobility and new COVID-19 cases per million
0 7-day average, % vs. baseline new cases per million
SG HK TH KR MY TW IN PH ID CN 150 0
Source: National sources, J.P. Morgan; 2020 figures are estimates for 4Q20 New cases
per million -10
Brexit has exited the building 100

-20
The agreement of a UK-EU deal on the future relationship is -30
far from the end of the story for either party. But from the 50 Google
Activity Index
point of view of the global business cycle, it removes the -40
threat of a disruptive “no-deal” outcome. Over the medium
0 -50
term, the deal has the character we have long expected: secur- Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
ing tariff-free trade in goods but leaving a range of non-tariff Source: Google and J.P. Morgan
barriers in place and limiting the UK’s ability to provide ser-
vices to EU-based customers compared to the status quo. That Once the holidays pass, the latest rise in cases and deaths will
suggests to us an additional hit to UK activity in excess of the increase pressure for policy action and will likely hit growth
2% of GDP or so seen already as Brexit-related uncertainty and mobility harder. Indeed, in Mexico five of 32 states have
has limited business investment. Meanwhile, the UK has not already re-imposed tight restrictions on activity, including the
identified any clear and politically deliverable economic strat- two most populous states in the country. We expect other
egy that exploits the autonomy Brexit has provided and acts states to follow suit in the next few weeks as hospitalizations
as a significant offset. rise. Thus, even as we revise up 4Q GDP growth to 8.2% q/q,
saar this week, we still think GDP will contract by 1.4% in
CBRT tightening boosts credibility 1Q21.
After the 475bp hike in November, Turkey’s CBRT raised its
key policy rate (1-week repo rate) 200bp to 17% last week.
The move was in line with our expectations and should be
enough to contain price pressures and restore policy credibil-
ity. Hence, we expect the next policy move will be a 100bp
cut in April. As evidenced by the diminishing FX demand
from local investors, there has already been a significant re-
covery in the credibility of the CBRT and the lira, which has
appreciated 8% against the US dollar since the MPC decision
Editor: Gabriel de Kock (1-212) 622-6718 gabriel.s.dekock@jpmorgan.com
and by 15% since Governor Ağbal was appointed. Near-term
growth is expected to be held back by pandemic headwinds,
with GDP projected to contract in 4Q20 and 1Q21, but the
risks are to the upside with the recent changes to the US out-
look, and growth should firm as 2021 evolves alongside fad-
ing inflation and financial-stability concerns.
LATAM lockdown threshold remains high

LATAM has been the region hardest hit region by the pan-
demic, and case counts are now rising back to midyear peaks.
However, mobility remains above its November level as we
3
Carlton Strong (1-212) 834-5612 Global economic outlook sum-
carlton.m.strong@jpmorgan.com mary
Joseph Lupton (1-212) 834-5735 December 31, 2020
Global economic outlook summary

Real GDP Real GDP Consumer prices
% over a year ago % over previous period, saar % over a year ago
2020 2021 2022 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 2Q20 4Q20 2Q21 4Q21
United States -3.4 ↑ 4.2 ↑ 3.2 ↓ -31.4  33.4 ↑ 5.0↑ 0.5 ↑ 5.0 ↑ 6.0 ↓ 0.4  1.2  2.9  2.0
Canada -5.5 ↑ 3.6 ↑ 3.6 -38.1 40.5 5.0↑ -1.0 ↓ 4.5 ↑ 4.7 0.0 0.8 2.4 2.0
Latin America -7.1  3.8 ↑ 3.1  -44.2  49.2 ↓ 8.1 ↑ -0.5 ↓ 2.3 ↑ 3.4 ↓ 6.5  6.6 ↓ 9.0 ↓ 8.5
Argentina -10.7 4.1 2.5 -50.2 61.7 6.0 1.0 1.5 3.0 43.8 36.3 53.5 55.0
Brazil -4.6  2.6  2.9  -33.2  34.6  4.0  -2.0  1.5  4.0  2.1  4.1  5.6  4.0
Chile -5.7 5.4 2.8 -43.9 22.6 32.0 2.0 1.0 1.5 2.9 3.0 3.7 3.3
Colombia -8.0  5.0  4.5  -50.5  39.6  12.5  5.0  3.5  3.5  2.9  1.6  1.9  2.7
Ecuador -7.0 3.2 2.0 -34.3 22.0 8.0 3.2 2.5 2.5 0.6 -1.2 -1.6 0.3
Mexico -8.6 ↑ 4.0 ↑ 3.3 ↑ -52.4  58.0  8.2↑ -1.4 ↓ 4.0 ↑ 3.5 ↓ 2.8  3.5 ↓ 3.6 ↓ 3.1↓
Peru -13.0 8.0 3.6 -74.0 156.7 8.0 0.0 1.0 1.5 1.7 2.0 2.0 1.9
Uruguay -5.5 ↓ 2.8 ↓ 2.5 ↓ -35.5 ↓ 35.2 ↓ 8.0↑ 0.0  0.5 ↓ 3.0 ↓ 10.8  9.7  6.8  6.7
Asia/Pacific -1.5 7.3 4.5 9.7 24.9 10.4↓ 5.5 4.7 5.1 2.0 0.5 0.9 1.7
Japan -5.2  3.1  1.9  -29.2  22.9  6.0  0.0  5.5  3.5  0.1  -1.0  -0.5  0.2
Australia -2.9 3.4 2.6 -25.3 14.0 6.6 5.0 3.2 2.8 -0.3 0.4 2.9 2.0
New Zealand -3.3  2.4  4.3  -37.4  68.9  -8.9  -4.5  4.1  6.2  1.5  0.9  1.2  1.5
EM Asia -0.6 8.5 5.2 21.1 25.7 11.8↓ 6.9 4.6 5.5 2.6 0.9 1.1 2.1
China 2.1  9.2  5.5  56.5  7.5  12.8  6.8  4.5  5.5  2.7  -0.2  0.3  1.8
India -9.0 12.2 4.7 -68.4 117.1 19.0 14.0 4.0 4.5 6.5 6.8 4.6 4.4
Ex China/India -2.9  4.7  4.9  -22.4  23.1  5.3↓ 3.4 ↑ 5.0  6.2  0.1  0.4  1.4  1.4
Hong Kong -5.9 4.7 3.2 -0.4 11.7 2.5 3.0 5.5 6.5 1.3 -1.0 0.0 2.1
Indonesia -2.2  4.0  4.8  -24.9  14.6  5.0  5.0  5.0  5.0  2.3  1.7  1.8  2.1
Korea -1.0 3.5 3.5 -12.0 8.8 3.0↓ 3.0 ↑ 3.5 7.0 -0.1 0.3 1.4 1.2
Malaysia -5.4  7.3  5.0  -51.4  95.0  1.1  5.0  4.0  6.0  -2.6  -1.0  3.2  1.9
Philippines -9.1 8.4 5.7 -47.4 35.9 30.0 3.0 7.5 6.0 2.3 2.6 2.6 2.4
Singapore -6.2  5.7  8.0  -43.2  42.3  3.5  3.0  8.0  9.0  -1.2  -0.2  0.7  0.5
Taiwan 2.6 4.5 3.4 -2.8 16.6 3.0 1.8 4.5 5.0 -1.0 -0.2 1.1 1.3
Thailand -6.3  5.1  9.2  -34.0  28.8  4.5  3.0  7.0  6.0  -2.7  -0.9  0.7  0.3
Western Europe -7.5 ↑ 4.8 ↑ 4.7 -41.3 ↑ 61.4 ↑ -7.8 1.6 11.2 9.4 0.3 -0.1 1.2 1.7
Euro area -7.2  4.6  4.4  -39.2  60.0  -9.5  2.0  10.0  9.0  0.2  -0.3  1.0  1.6
Germany -5.6 3.6 4.0 -33.8 38.5 -4.0 -1.5 12.5 6.5 0.7 -0.6 1.3 2.7
France -9.0  5.8  4.3  -44.8  98.3  -15.0  4.5  8.5  9.5  0.3  -0.1  0.9  1.2
Italy -9.1 5.3 4.8 -42.7 80.4 -12.0 3.5 7.5 10.5 -0.2 -0.6 0.3 1.1
Spain -11.5 ↓ 6.4 ↓ 7.2  -54.5 ↓ 83.7 ↓ -8.0  3.5  11.5  15.5  -0.6  -0.9  0.5  1.3
Norway -3.7 3.2 3.6 -22.0 22.4 -0.3 -0.5 7.5 6.5 1.1 1.9 3.0 2.6
Sweden -3.1  2.6  3.8  -28.2  21.2  -0.7  -1.4  9.0  7.0  0.1  0.3  1.6  1.1
United Kingdom -10.2 ↑ 6.9 ↑ 6.0 -56.4 ↑ 81.1 ↑ -2.0 0.5 17.8 12.2 0.7 0.6 1.8 2.1
EMEA EM -3.4  3.4  4.0  -32.9  40.9  -5.6  3.5  6.1  5.8  4.1  4.9  4.8  4.3
Czech Republic -6.9 4.5 5.0 -29.9 30.7 -18.0 20.0 5.5 8.2 3.1 2.8 2.2 1.8
Hungary -6.0  3.5  5.6  -46.8  53.9  -10.5  4.3  7.4  8.7  2.5  2.8  3.2  3.3
Israel -3.5 5.5 5.0 -29.2 38.9 -13.0 13.0 8.2 8.2 -0.5 -0.7 0.4 0.4
Poland -3.3  4.0  5.7  -25.2  35.5  -11.5  8.9  6.4  8.2  3.2  2.9  2.3  2.6
Romania -5.2 3.0 6.0 -40.6 24.1 0.0 0.4 7.6 10.8 2.5 2.2 2.0 3.1
Russia -3.5  2.8  3.0  -29.0  24.0  -2.0  2.0  7.5  4.0  3.1  4.3  4.0  3.4
South Africa -7.0 3.8 2.2 -51.7 66.1 7.0 -2.0 3.8 3.5 2.4 3.1 4.2 4.1
Turkey 0.7  3.0  4.1  -36.6  78.4  -7.8  -4.3  2.4  4.9  11.7  13.3  13.3  11.3
Global -3.9 5.4 ↑ 4.1 -19.3 ↑ 37.9 ↑ 3.8↑ 2.7 ↑ 6.1 ↑ 6.2 ↓ 1.5 1.2 2.3 2.3
Developed markets -5.2 ↑ 4.3 ↑ 3.6 ↓ -34.9 ↑ 42.3 ↑ 0.4 ↑ 0.9 ↑ 7.2 ↑ 6.8 ↓ 0.3  0.5  1.9  1.7
Emerging markets -1.9 7.1 4.8 4.0 31.2 8.8 5.4 ↑ 4.5 ↑ 5.3 3.4 2.3 2.8 3.3
Emerging ex China -5.2  5.4  4.2  -38.6  50.4  5.5  4.2  4.4 ↑ 5.1  2.4 2.6  2.6  2.5
Global — PPP weighted -3.7 ↑ 6.1 ↑ 4.3  -18.1  39.1 ↑ 5.4↑ 3.6 ↑ 5.7 ↑ 5.9 ↓ 2.0  1.5  2.2  2.3↓
Note: For some emerging economies seasonally adjusted GDP data are estimated by J.P. Morgan. Bold denotes changes from last edition of Global Data Watch, with arrows show-
ing the direction of changes. Underline indicates beginning of J.P. Morgan forecasts. Unless noted, concurrent nominal GDP weights calculated with current FX rates are used in
computing our global and regional aggregates. Regional CPI aggregates exclude Argentina and Ecuador. Source: J.P. Morgan. Any long form nomenclature for references to China;
Hong Kong; Taiwan; and Macau within this research material are Mainland China; Hong Kong SAR (China); Taiwan (China); and Macau SAR (China).
4
Carlton Strong (1-212) 834-5612 Global Data Watch
carlton.m.strong@jpmorgan.com December 31, 2020
G-3 economic outlook detail

2020 2021 2022
2020 2021 2022 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
United States
Real GDP -3.4 4.2 3.2 -31.4 33.4 5.0 0.5 5.0 6.0 3.8 3.0
Private consumption -3.8 5.0 3.8 -33.2 41.0 3.7 1.0 6.0 7.0 4.5 3.5
Equipment investment -4.9 11.2 3.6 -35.9 68.2 26.0 3.0 6.0 6.0 4.0 3.0
Non-residential construction -10.7 -6.5 2.0 -33.6 -17.4 0.0 -4.0 -2.0 -2.0 2.0 4.0
Intellectual property products 1.4 4.5 5.5 -11.4 8.4 5.0 5.0 6.0 5.0 5.0 6.0
Residential construction 6.1 11.8 3.7 -35.6 63.0 37.0 2.0 5.0 4.0 4.0 4.0
Inventory change ($ bn saar) -82.0 92.4 96.1 -287.0 -3.7 43.6 43.8 72.1 118.7 135.1 128.0
Government spending 1.1 -1.3 0.5 2.5 -4.8 -1.9 -2.6 0.4 0.4 0.4 0.5
Exports of goods and services -13.1 4.2 3.9 -64.4 59.6 19.0 3.0 3.0 3.0 3.0 4.0
Imports of goods and services -9.7 9.9 4.0 -54.1 93.1 21.0 3.0 6.0 6.0 5.0 3.5
Domestic final sales contribution -2.6 4.1 3.3 -28.5 30.1 5.2 0.7 5.1 5.7 3.9 3.3
Inventories contribution -0.7 0.9 0.0 -3.5 6.6 1.0 0.0 0.6 1.0 0.3 -0.1
Net trade contribution -0.2 -0.9 -0.1 0.6 -3.2 -1.3 -0.2 -0.7 -0.7 -0.5 -0.2
Consumer prices (%oya) 1.2 2.1 2.0 0.4 1.3 1.2 1.5 2.9 2.1 2.0 1.9
Excluding food and energy (%oya) 1.7 1.9 2.0 1.3 1.7 1.6 1.6 2.4 1.8 1.8 1.9
Core PCE deflator (%oya) 1.4 1.6 1.7 1.0 1.4 1.3 1.3 1.9 1.4 1.6 1.6
Federal budget balance (% of GDP, FY) -15.8 -11.7 -6.6
Personal saving rate (%) 16.3 13.0 10.2 26.0 16.0 13.8 17.8 12.1 11.5 10.8 10.3
Unemployment rate (%) 8.1 6.2 5.0 13.0 8.8 6.8 7.1 6.5 5.8 5.5 5.2
Industrial production, manufacturing -7.1 4.6 2.3 -46.9 53.7 9.0 0.0 5.1 4.9 2.4 1.6
Euro area
Real GDP -7.2 4.6 4.4 -39.2 60.0 -9.5 2.0 10.0 9.0 5.0 3.5
Private consumption -8.2 4.3 4.8 -41.1 68.6 -15.0 2.5 10.0 12.0 5.0 3.5
Capital investment -9.5 3.3 6.3 -50.3 65.4 -12.0 2.5 8.0 10.0 10.0 5.0
Government consumption 1.0 4.4 2.1 -8.6 20.4 5.0 3.0 3.0 2.0 2.0 2.0
Imports of goods and services -10.0 6.5 4.9 -55.3 59.0 3.0 5.0 15.0 10.0 3.0 3.5
Domestic final sales contribution -6.3 3.9 4.3 -34.9 54.9 -9.8 2.5 7.7 8.8 5.2 3.4
Inventories contribution -0.3 0.0 0.1 -0.9 -5.0 1.5 -0.5 3.0 -0.6 -0.3 0.3
Net trade contribution -0.6 0.6 0.0 -3.4 10.1 -1.3 0.0 -0.8 0.8 0.1 -0.1
Consumer prices (HICP, %oya) 0.2 1.0 0.9 0.2 0.0 -0.3 0.4 1.0 1.3 1.6 0.9
ex food, alcohol and energy 0.7 0.8 0.9 0.9 0.6 0.2 0.7 0.7 0.8 1.2 0.8
General govt. budget balance (% of GDP, FY) -9.6 -7.2 -4.3
Industrial production -9.4 6.0 4.0 -49.6 82.9 0.0 4.0 5.0 5.0 5.0 4.0
Japan
Real GDP -5.2 3.1 1.9 -29.2 22.9 6.0 0.0 5.5 3.5 2.0 1.5
Private consumption -6.1 2.9 1.5 -29.4 22.1 5.0 -1.0 9.0 2.0 1.0 1.0
Business investment -6.7 -0.9 3.9 -20.8 -9.3 3.0 0.0 2.0 5.0 5.0 4.0
Residential construction -7.4 -2.2 1.0 2.0 -21.2 -5.0 5.0 1.0 1.0 1.0 1.0
Public investment 3.2 2.3 0.8 7.8 1.9 3.0 1.0 2.0 2.0 2.0 1.0
Government consumption 2.3 2.3 -0.4 1.1 11.6 2.0 2.0 0.0 0.0 0.0 0.0
Imports of goods and services -7.2 0.8 3.8 5.5 -30.8 12.0 4.0 4.0 8.0 6.0 3.0
Domestic final sales contribution -4.1 2.0 1.4 -17.8 12.3 3.6 0.1 5.2 2.0 1.4 1.2
Inventories contribution 0.1 0.0 0.0 1.2 -1.4 0.5 0.4 -1.0 0.3 -0.2 -0.1
Net trade contribution -1.2 1.2 0.5 -12.7 12.0 1.8 -0.5 1.3 1.1 0.7 0.4
Consumer prices (%oya) -0.1 -0.3 0.0 0.1 0.2 -1.0 -0.9 -0.5 -0.1 0.2 0.1
ex food and energy -0.1 -0.2 -0.2 0.0 -0.1 -0.5 -0.4 -0.6 0.0 0.1 0.1
General govt. net lending (% of GDP, CY) -11.6 -10.9 -6.4
Industrial production -10.2 11.6 1.9 -52.3 40.2 30.0 17.0 13.0 3.0 1.0 1.0
Memo: Global industrial production -5.8 7.5 3.6 -25.7 67.7 7.4 3.7 6.1 5.2 3.9 0.0
%oya -13.9 -3.8 -1.9 2.7 17.3 5.5 4.7 0.0
Note: More forecast details for the G-3 and other countries can be found on J.P. Morgan’s Morgan Markets client web site. Source: J.P. Morgan
5
Joseph Lupton (1-212) 834-5735 Global Central Bank Watch
joseph.p.lupton@jpmorgan.com December 31, 2020
Olya Borichevska (1-212) 834-5398
olya.e.borichevska@jpmorgan.com
Global Central Bank Watch

Official Current 4-qrtr change (bp) Forecast Forecast (%pa)
Last change Next mtg
rate rate (%pa) Last Next next change Mar 21 Jun 21 Sep 21 Dec 21 Mar 22
Global 1.19 119 -3 1.15 1.09 1.09 1.12 1.13
excluding US 1.55 155 -5 1.50 1.42 1.41 1.45 1.47
Developed - 0.02 -2 0 -0.02 -0.02 -0.02 -0.02 -0.02
Emerging 3.04 304 -8 2.96 2.82 2.81 2.87 2.91
Latin America 2.49 249 -16 2.33 2.25 2.50 3.04 3.51
EMEA EM 4.94 494 -3 4.90 4.30 4.04 3.98 3.81
EM Asia 2.76 276 -8 2.68 2.62 2.62 2.62 2.62
The Americas 0.58 58 -2 0.55 0.54 0.58 0.66 0.72
United States Fed funds 0.25 25 0 15 Mar 20 (-100bp) 27 Jan 21 On hold 0.25 0.25 0.25 0.25 0.25
Canada O/N rate 0.25 25 0 27 Mar 20 (-50bp) 20 Jan 21 On hold 0.25 0.25 0.25 0.25 0.25
Brazil SELIC O/N 2.00 200 0 5 Aug 20 (-25bp) 20 Jan 21 Aug 21 (+25bp) 2.00 2.00 2.50 3.50 4.50
Mexico Repo rate 4.25 425 -50 24 Sep 20 (-25bp) 11 Feb 21 Feb 21 (-25bp) 3.75 3.50 3.50 3.50 3.50
Chile Disc rate 0.50 50 0 31 Mar 20 (-50bp) 27 Jan 21 4Q 21 (+25bp) 0.50 0.50 0.50 0.75 0.75
Colombia Repo rate 1.75 175 0 25 Sep 20 (-25bp) 29 Jan 21 3Q 21 (+25bp) 1.75 1.75 2.00 2.50 2.50
Peru Reference 0.25 25 0 9 Apr 20 (-100bp) 14 Jan 21 4Q21 (+25bp) 0.25 0.25 0.25 0.50 0.50
Europe/Africa 0.72 72 -1 0.72 0.59 0.54 0.53 0.50
Euro area Depo rate - 0.50 -50 0 12 Sep 19 (-10bp) 21 Jan 21 On hold -0.50 -0.50 -0.50 -0.50 -0.50
United Kingdom Bank rate 0.10 10 0 19 Mar 20 (-15bp) 4 Feb 21 On hold 0.10 0.10 0.10 0.10 0.10
Norway Dep rate 0.00 0 0 7 May 20 (-25bp) 21 Jan 21 1Q 22 (+25bp) 0.00 0.00 0.00 0.00 0.25
Sweden Repo rate 0.00 0 0 19 Dec 19 (+25bp) 10 Feb 21 On hold 0.00 0.00 0.00 0.00 0.00
Czech Republic 2-wk repo 0.25 25 0 7 May 20 (-75bp) 4 Feb 21 3Q 22 (+25bp) 0.25 0.25 0.25 0.25 0.25
Hungary Base rate 0.60 60 -10 21 Jul 20 (-15bp) 26 Jan 21 23 Mar 21 (-10bp) 0.50 0.50 0.50 0.50 0.50
Israel Base rate 0.10 10 0 6 Apr 20 (-15bp) 4 Jan 21 On hold 0.10 0.10 0.10 0.10 0.10
Poland 7-day interv 0.10 10 0 28 May 20 (-40bp) 13 Jan 21 4Q 22 (+15bp) 0.10 0.10 0.10 0.10 0.10
Romania Base rate 1.50 150 -50 5 Aug 20 (-25bp) - Jan 21 (-25bp) 1.00 1.00 1.00 1.00 1.00
Russia Key pol rate 4.25 425 0 24 Jul 20 (-25bp) 12 Feb 21 2Q 21 (-25bp) 4.25 4.00 4.00 4.00 4.00
South Africa Repo rate 3.50 350 0 23 Jul 20 (-25bp) 21 Jan 21 Nov 21 (+25bp) 3.50 3.50 3.50 3.75 3.75
Turkey 1-wk repo 17.00 1700 0 24 Dec 20 (+200bp) 21 Jan 21 Apr 21 (-100bp) 17.00 14.00 12.50 12.00 11.00
Asia/Pacific 2.11 211 -7 2.05 2.00 2.00 2.00 2.00
Australia Cash rate 0.25 25 -15 19 Mar 20 (-25bp) 2 Feb 21 On hold 0.10 0.10 0.10 0.10 0.10
New Zealand Cash rate 0.25 25 0 15 Mar 20 (-75bp) 24 Feb 21 Apr 21 (-50bp) 0.25 -0.25 -0.25 -0.25 -0.25
Japan Pol rate IOER1 - 0.10 -10 0 28 Jan 16 (-20bp) 21 Jan 21 On hold -0.10 -0.10 -0.10 -0.10 -0.10
Hong Kong Disc. wndw 0.50 50 0 3 Mar 20 (-50bp) - On hold 0.50 0.50 0.50 0.50 0.50
China 1-yr MLF 2.95 295 -10 15 Apr 20 (-20bp) - 1Q 21 (-10bp) 2.85 2.75 2.75 2.75 2.75
Korea Base rate 0.50 50 0 28 May 20 (-25bp) 15 Jan 21 On hold 0.50 0.50 0.50 0.50 0.50
Indonesia BI RRR 3.75 375 -25 19 Nov 20 (-25bp) 21 Jan 21 1Q 21 (-25bp) 3.50 3.50 3.50 3.50 3.50
India Repo rate 4.00 400 0 22 May 20 (-40bp) 5 Feb 21 On hold 4.00 4.00 4.00 4.00 4.00
Malaysia O/N rate 1.75 175 0 7 Jul 20 (-25bp) 22 Jan 21 On hold 1.75 1.75 1.75 1.75 1.75
Philippines Rev repo 2.00 200 0 19 Nov (-25bp) 11 Feb 21 On hold 2.00 2.00 2.00 2.00 2.00
Thailand 1-day repo 0.50 50 0 20 May 20 (-25bp) 3 Feb 21 On hold 0.50 0.50 0.50 0.50 0.50
Taiwan Official disc. 1.125 -25 0 19 Mar 20 (-25bp) 18 Mar 21 On hold 1.13 1.13 1.13 1.13 1.13
Source: J.P. Morgan. 1 BoJ sets the policy rate on IOER (O/N) and targets 10-year JGB yields as policy guidance
Bold denotes move since last GDW and forecast changes. Underline denotes policy meeting during upcoming week. Aggregates are GDP-weighted averages.
Any long-form nomenclature for references to China; Hong Kong; Taiwan; and Macau within this research material are Mainland China;
Hong Kong SAR (China); Taiwan (China); and Macau SAR (China).
6
Joseph Lupton (1-212) 834-5735 Olya Borichevska (1-212) 834-5398 Global Data Watch
joseph.p.lupton@jpmorgan.com olya.e.borichevska@jpmorgan.com December 31, 2020
Bennett Parrish
bennett.parrish@jpmchase.com
Nowcast global GDP 4Q: ment of the pandemic headwinds. However, the recent up-
grades to the official forecast suggest the data tracking of the
Upside risk marked to market nowcaster was sending the right signal.
As we track the COVID-19 second wave, official activity data Figure 3: Risk bias, 4Q20
have on balance surprised to the upside. At the same time, %-pts. Nowcast minus forecast
30
downside tail risks around US fiscal policy and Brexit have
25
faded. This week, we raise the J.P. Morgan forecast for 4Q 20
global real GDP growth 0.7%-pt to 3.8%ar (Figure 1). The rise 15
largely reflects a revision in the US where we now see current- 10
quarter growth at 5%ar against a previous estimate of 2.75%. 5
0
We also revised up our forecasts for 4Q growth in Canada and
-5
Mexico. These come on the heels of our recent upward revision -10
to China. We lowered our forecast for 4Q growth in Korea after
Per
Bra
Jpn
UK
US
EM Asia
Chl
Pol
Tur
Col
Kor
Twn
Chn
Glob
Zaf
EMU
Rus
Mex
Glob,wt
DM
EM
Latam
EMEA EM
a disappointing November IP report. Despite raising our current
quarter GDP projection, we see growth moderating into 1Q20 Source:J.P. Morgan. Note: Not all nowcasters shown
as a surge in holiday-season COVID-19 cases is expected to

weigh on the already depressed services sector. We will learn Table 1: Real GDP
more next week when we see the full global set of December %q/q, saar. Underline indicates J.P. Morgan forecast
3Q20 4Q20
PMIs.
Fcst/Actual Nowcast Forecast Nowcast
Global 37.9 4.1 3.8 5.2
Figure 1: J.P. Morgan global GDP
Weighted Avg* 35.5 25.6 3.1 6.6
% change saar; both scales Developed* 43.5 27.6 0.3 5.4
38 9 US 33.4 33.8 5.0 6.8
EMU 60.0 24.4 -9.5 1.9
3Q20 UK 81.1 0.2 -2.0 0.2
36 7
Canada 40.5 52.1 5.0 4.2
Japan 22.9 16.8 6.0 11.5
34 4Q20 5 Emerging* 21.2 22.2 8.1 8.8
EM Asia* 8.8 14.1 11.3 6.8
1Q21
32 3 China 7.5 14.7 12.8 7.3
Korea 8.8 7.7 3.0 6.4
30 1 Taiwan 16.6 17.0 3.0 5.8
Aug 7, 20 Sep 12, 20 Oct 18, 20 Nov 23, 20 Dec 30, 20 Singapore 42.3 17.0 3.5 -6.4
Source: J.P. Morgan Latam* 50.1 40.9 8.1 15.3
Brazil 34.6 46.4 4.0 10.2
Mexico 58.0 26.6 8.2 6.9
Figure 2: Global real GDP
Argentina 61.7 43.7 6.0 18.1
%q/q, saar; J.P. Morgan projection and Nowcaster through 4Q20 Chile 22.6 18.2 32.0 57.7
10 Colombia 39.6 25.7 12.5 22.6
Peru 156.7 119.4 8.0 34.2
5 EMEA EM* 41.1 35.1 -4.9 10.1
0 Poland 35.5 28.8 -11.5 11.2
Hungary 53.9 3.2 -10.5 3.3
-5 Czech Rep. 30.7 25.4 -18.0 8.6
Actual/JPM
-10 Nowcaster (%q/q, saar) Romania 24.1 30.2 0.0 20.2
(dashed is %m/m saar) 3Q: +37.9%ar Russia 24.0 9.3 -2.0 7.3
-15 Turkey 78.4 95.3 -7.8 8.0
-20 South Africa 66.1 65.2 7.0 24.1
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 * Aggregates are GDP weighted averages of constituents. Source: J.P. Morgan. Any long form
Source:J.P.Morgan nomenclature for references to China; Hong Kong; Taiwan; and Macau within this research material
are Mainland China; Hong Kong SAR (China); Taiwan (China); and Macau SAR (China).
Our top-down global nowcaster for 4Q GDP growth edged up
0.1%-pt for the second consecutive week to 5.2% ar. The latest While the top-down model is tracking above our global GDP
reading is 1.4%-pts above our official forecast (Figure 2). We forecast, the aggregated bottom-up country nowcaster is
have been explaining the large implied upside risks from the tracking even higher at 6.6%ar global GDP growth in 4Q. The
gap between the nowcaster and the official forecast (concen- weighted national aggregate of nowcasters sits 2.8%-pts
trated in Europe and, to a lesser extent, the US) by noting that above the official outlook (Table 1). The implied upside risk
the nowcaster is blind to activity restrictions and our assess- in the US declined by 2.7%-pts to 1.8%-pts following the up-
7
Joseph Lupton (1-212) 834-5735 Olya Borichevska (1-212) 834-5398 Nowcast global GDP 4Q
joseph.p.lupton@jpmorgan.com olya.e.borichevska@jpmorgan.com December 31, 2020
Bennett Parrish
bennett.parrish@jpmchase.com
ward revision to the US outlook. The implied upside risk re- Figure 6: Euro area real GDP, 4Q20
mains elevated at 11.4%-pts in the Euro area and 15%-pts in JPM forecast
%q/q, saar
EMEA EM. China and Mexico are the only countries in our
2 JPM nowcast
set with lower nowcaster growth than the official outlook
(Figure 3). 0
-2
Table 2: J.P. Morgan global aggregates -4
%ch, sa (ar for qrt). PMIs are levels. Confidence is st.dv from 2010-pres avg -6
3Q20 4Q20 Sep20 Oct20 Nov20 Dec20 -8
PMI, mfg 53.1 55.5 53.7 54.3 55.2 56.8 -10
Oct 30
Nov 06
Nov 13
Nov 20
Nov 27
Dec 04
Dec 11
Dec 18
Dec 25
Dec 30
Jan 06
Jan 13
Jan 20
Jan 27
Feb 03
Feb 10
PMI, serv 51.6 53.1 52.0 52.9 52.2 54.1
IP 71.2 17.6 1.3 1.2 1.6 1.8
Retail sales 51.2 13.9 1.2 1.0 0.7 0.9 Source:J.P. Morgan
Auto sales 243.2 1.0 3.6 0.6 -3.5 1.8
G-3 cap. ship. 39.3 27.2 1.3 4.8 0.1 2.0 Figure 7: EM Asia real GDP, 4Q20 JPM forecast
G-3 cap. orders 63.4 28.1 0.4 2.7 1.2 2.0
Cap. imports 79.8 23.8 4.6 -0.7 3.6 1.7 %q/q, saar JPM nowcast
Bus conf -0.5 0.2 -0.3 0.0 0.2 0.3 15
Cons conf -0.7 -0.3 -0.4 -0.3 -0.6 -0.1
Nowcast (ar) 4.0 5.2 5.2 5.2 5.1 5.4
Note. Shaded values show forecasts computed by the Kalman filter estimates from the dynam- 10
ic factor model. Underlined values are our estimates based on available data and our judg-
ment. Source: J.P. Morgan, Markit, and national statistical agencies.
5
Figure 4: Global real GDP, 4Q20 JPM forecast 0

%q/q, saar JPM Global nowcast
Oct 30
Nov 06
Nov 13
Nov 20
Nov 27
Dec 04
Dec 11
Dec 18
Dec 25
Dec 30
Jan 06
Jan 13
Jan 20
Jan 27
Feb 03
Feb 10
8 Nowcast, wghtd avg
Source:J.P. Morgan
6
4 Figure 8: Latam real GDP, 4Q20 JPM forecast

%q/q, saar
2 JPM nowcast
20
0
15
Oct 30
Nov 06
Nov 13
Nov 20
Nov 27
Dec 04
Dec 11
Dec 18
Dec 25
Dec 30
Jan 06
Jan 13
Jan 20
Jan 27
Feb 03
Feb 10
10
Source:J.P. Morgan
5
Figure 5: US real GDP, 4Q20
JPM forecast 0
Oct 30
Nov 06
Nov 13
Nov 20
Nov 27
Dec 04
Dec 11
Dec 18
Dec 25
Dec 30
Jan 06
Jan 13
Jan 20
Jan 27
Feb 03
Feb 10
%q/q, saar
JPM nowcast
8
Source:J.P. Morgan
6
Figure 9: EMEA EM real GDP, 4Q20 JPM forecast
4
%q/q, saar
JPM nowcast
2 40
30
0
Oct 30
Nov 06
Nov 13
Nov 20
Nov 27
Dec 04
Dec 11
Dec 18
Dec 25
Dec 30
Jan 06
Jan 13
Jan 20
Jan 27
Feb 03
Feb 10
20
10
Source:J.P. Morgan
0
-10
Oct 30
Nov 06
Nov 13
Nov 20
Nov 27
Dec 04
Dec 11
Dec 18
Dec 25
Dec 30
Jan 06
Jan 13
Jan 20
Jan 27
Feb 03
Feb 10
Source:J.P. Morgan
* For primer on various Nowcasters, click here: Global, US, EMU, UK, Japan, EM.
8
Selected recent research from

J.P. Morgan Economics
Global
Tracking faster, thinking slower, Dec 18, 2020
Japan
Sticky services prices a reflation impediment, Dec 11, 2020 Japan's 2021 growth strategy, Dec 11, 2020
EM still uneasy with easing in a crisis, Dec 11, 2020 Japan: Mid-term fiscal review, what's next? Oct 16, 2020
COVID-19: Two reasons to vaccinate the elderly first, Dec 4, 2020 Capital is the cornerstone of high growth for Japan's SMEs, Oct 9, 2020
G-4 inflation expectations slip further, Nov 20, 2020 Japan: Suganomics shoots the third arrow, Sep 25, 2020
The impact of a COVID-19 vaccine on equilibrium mobility, Nov 20, 2020 Will Suga's digitalization boost Japan's ICT investment? Sep 25, 2020
Output gap uncertainty makes inflation key for EM policy, Nov 13, 2020 Results and prospects of Abenomics, Sep 11, 2020
Women and COVID-19: The other 47 percent, Nov 13, 2020
Non-Japan Asia and Pacific
With wave following wave to the edge, Nov 6, 2020
Goods recovery has legs to run, Oct 30, 2020 China: What do inventories tell us about the industry cycle? Nov 20, 2020
Tracking global employment using alt-data, cautiously, Oct 9, 2020 China: Fiscal policy remains in the front seat, Nov 13, 2020
EM inflation still anchored, Oct 9, 2020 India and Indonesia: Restrained despite fiscal space, Nov 13, 2020
The weight of the world: Updated to 2019, Oct 9, 2020 India: Not out of the woods yet, Nov 13, 2020
Services: Incomplete picture of an incomplete recovery, Oct 2, 2020 Australian labor data: Chopping off the peak, Nov 6, 2020
Learning to live with COVID-19, Oct 2, 2020 China: Deflation is coming, Oct 30, 2020
QE is not enough, Sep 18, 2020 RBA guidance change removes all doubt, Oct 30, 2020
Global profit plunge less bad, but still a material headwind, Sep 11, 2020 How sustainable is Taiwan’s recent export strength? Oct 23, 2020
EM-DM growth relationship: Not what it used to be, Sep 11, 2020 A preview of China's next Five-Year Plan, Oct 16, 2020
India’s fiscal response: To spend or not to spend, Oct 16, 2020
United States and Canada Korea: Fiscal rule, and long-term gov't debt projections, Oct 9, 2020
US: Fiscal issues for the Biden administration, Dec 4, 2020 Australia: Minding the gaps in income and spending, Oct 2, 2020
US: The macroeconomics of the 2020 election, Nov 13, 2020 The fiscal conundrum of Brazil and India, Sep 25, 2020
US: Record 3Q GDP growth marred by rising case count, Oct 30, 2020 Malaysia: Fiscal financing amid stretched domestic support, Sep 25, 2020
US: Popping the hood on the consumer's balance sheet, Oct 9, 2020 Drivers of CNY movements, Sep 18, 2020
US: Follow the money...from the government to the bank, Sep 25, 2020 Australian BoP: Making the most of a home ground advantage, Sep 18, 2020
US: Fiscal policy implications of the upcoming elections, Sep 18, 2020
Latin America
Western Europe Brazil and Mexico: A tale of two policy approaches, Oct 30, 2020
UK fiscal stimulus: Where did the money go? Dec 4, 2020 Mexico: The domestic side of financial stability, Oct 30, 2020
Germany: Wage growth moderating before IG Metall deal, Nov 27, 2020 Brazil: Reading BCB’s communication with natural language processing, Oct 23, 2020
Sweden's distinct approach, not as distinct anymore, Nov 20, 2020 Looking north: How US elections may impact Latin America, Oct 9, 2020
COVID-19: Will Europe reopen for Christmas? Nov 13, 2020 Mexico: The worst for core inflation is past, Oct 2, 2020
France: Gauging the impact of the new lockdown, Nov 13, 2020 The fiscal conundrum of Brazil and India, Sep 25, 2020
UK: Estimating the economic hit from the second wave, Oct 30, 2020 Mexico: A wishy-washy budget for 2021, Sep 18, 2020
Cross-country differences in Europe’s second COVID wave, Oct 23, 2020 Mexico: The recovery at a major crossroads, Sep 11, 2020
Euro area: Powerful fiscal policy supports also in 2021, Oct 23, 2020
Special Reports and Global Issues
Western Europe faces COVID's second wave, Oct 16, 2020
Euro area: surge in private savings can support recovery, Oct 9, 2020 Japan 2021 Outlook: If winter comes, can spring be far behind? Nov 25, 2020
France: Ongoing recovery despite higher infections, Oct 2, 2020 Down, up, and a way to go: 2021 global economic outlook, Nov 24, 2020
Euro area: Drag from tourism is large and uneven, Sep 25, 2020 The 2021 US Economic Outlook: The needle and the damage undone, Nov 20, 2020
Spain: Recovery to stall due to untamed virus resurgence, Sep 25, 2020 The election and the US-China great power conflict, Oct 14, 2020
UK: Tracking the growth slowdown into 4Q, Sep 25, 2020 Out of China and its repercussions, Sep 24, 2020
COVID-19: Gauging the self-shielding by Europe's elderly, Sep 18, 2020 Economic Issues for the 2020 US Elections, Sep 17, 2020
Working from home: Part of the new normal in Western Europe, Sep 11, 2020 Global Outlook: You can't always get what you need, Jul 1, 2020
Blurring lines on the path from QE to CE, Apr 29, 2020
Central Europe, Middle East, and Africa A Brave New World? QE in EM, Apr 24, 2020
Czech Republic: Deep-diving the second wave, Oct 16, 2020 Rocking the boat with alternative data: Introducing the JPM BIDSI trade tracker, Feb 20, 2020
The changing drivers of inflation in Israel, Oct 9, 2020 Risky business: the climate and the macroeconomy, Jan 13, 2020
Egypt & Pakistan: No tourism, no remittances, no problem? Oct 2, 2020 Ten questions about China in 2020, Jan 9, 2020
CE3: Virus cases surge, but bar for lockdowns is sky-high, Sep 18, 2020 Latin America 2020 Outlook: On the ropes but still punching, Dec 16, 2019
CE3: Current account divergence during COVID-19 times, Sep 11, 2020 EM Asia 2020 outlook: A bounded lift, Dec 6, 2019
South Africa: No squaring of the fiscal circle, Sep 11, 2020
Note: Research notes listed have been published in GDW; Special Reports and Global Issues are stand-alone features, but may also have appeared in some form in GDW.
9
Daniel Silver (1-212) 622-6039 United States
daniel.a.silver@jpmorgan.com December 31, 2020
Michael Feroli (1-212) 834-5523
michael.e.feroli@jpmorgan.com
passed. But the passed legislation brings stimulus a couple of

United States months sooner than we had anticipated, and this should pro-
 Fiscal deal should bring near-term stimulus vide more relief in the coming months in what is expected to
be a difficult winter in many ways. If the size of stimulus
 4Q GDP forecast boosted to 5% with recent reports checks is raised from $600 to $2,000 (for individuals making
generally beating expectations less than $75,000/year) as some policymakers have been
 Virus dynamics remain key to watch pushing for lately, this would bring more stimulus than we
currently have built into our forecast.
 We forecast nonfarm employment fell 25,000 in Decem-
ber with unemployment rate steady at 6.7% A stronger 4Q
The record real GDP surge in 3Q that the BEA revised up to
The growth-related news has been favorable in recent weeks 33.4% saar on December 22 is almost certainly an unsustain-
with respect to both backward-looking GDP source reports able rate of growth, and our forecast has long been anticipat-
and forward-looking developments related to upcoming fiscal ing a meaningful deceleration in 4Q as the economy transi-
stimulus. Many GDP source reports have been surprising to
tioned out of the boomy early stages of the recovery. But
the upside lately, including the November consumer spending
GDP source reports generally have surprised to the upside
data looking less downbeat than we had anticipated. Factoring
lately, and the 4Q moderation in growth doesn’t look as sub-
in the latest news, we raised our tracking of 4Q real GDP
stantial as we had previously anticipated. With many of the
growth up from 2.75% to 5.0% saar. Looking ahead, our fore-
key GDP source series now reported through November, we
cast had looked for Congress to pass fiscal stimulus in an ef-
look for 4Q real GDP growth of 5.0% saar, up from our earli-
fort to support the economy, but the realized deal implies that
er forecast of 2.75%.
the stimulus should come earlier than anticipated (while being
slightly smaller than our earlier expectations). Figure 1: Real consumer spending
2012$tr, saar
Even with these developments, COVID-19 likely will be a 13.5
meaningful drag on the economy around the turn of the year,
13.0
and we forecast that nonfarm employment declined in De-
cember (-25,000) as the virus weighed on the labor market. 12.5
But we now see more momentum than we had anticipated 12.0
heading into this weakening and support from fiscal policy 11.5
coming more quickly than we had previously believed. Vac-
11.0
cines continue to be rolled out in the US, and we think that the
10.5
combination of fiscal support and better control of COVID-19
Jan 19 Jul 19 Jan 20 Jul 20
will generate strong growth in the middle of 2021. Source: BEA, J.P. Morgan
A deal finally sealed While 5% growth is a strong quarterly average, we should

There was no shortage of drama around the recent fiscal nego- keep in mind that this figure reflects robust momentum late in
tiations, but the end result should bring about $900bn of add- 3Q and early in 4Q followed by meaningful softening later
ed fiscal stimulus to address the public health crisis and boost on. This is most clearly evident in the consumer spending
the economic recovery. We discuss many of the details of the data—real consumption rose 1.1% on average across the
package in recent research, but the most significant parts of months of 3Q, only 0.3% in October, and then fell 0.4% in
the legislation include another round of stimulus checks November (Figure 1). The November decline wasn’t as large
(~$166bn), a temporary extension and expansion of several as we had projected, but it still stands out as a pretty big drop
unemployment insurance programs (~$120bn), and a variety in spending by pre-pandemic standards. We think consump-
of supports for small businesses including funding of PPP tion will pull back further in December given that COVID-19
loans (~$325bn). Overall, we think this new stimulus will add should be restraining activity during the holiday season, and
around 2%-pts to 2021 growth and around 1%-pt to growth in our Chase consumer card spending tracker shows weakness
2022. through Christmas Day.
In terms of size, the passed stimulus was only slightly smaller Like we saw early on in the pandemic, consumer spending
than the $1tr amount we had previously penciled into our appears to be ground zero for effects of the recent surge in
forecast, and overall our earlier assumptions for fiscal stimu- new COVID-19 cases. A few measures of housing activity
lus were not too far off the mark from what actually was also have weakened somewhat lately, but this softening came
10
Daniel Silver (1-212) 622-6039 Global Data Watch
Michael Feroli (1-212) 834-5523
michael.e.feroli@jpmorgan.com
after a very robust period for activity, so it could just reflect Like some of these other measures, trade flows also have kept
some inevitable cooling rather than clear negative effects climbing rapidly lately with growth rates moderating from the
from the virus (Figure 2). And we look for continued strength strong bounce early in the recovery. While increases in trade
in the housing market over time, with support coming from suggest that activity is picking up around the world, imports
low mortgage rates. have been rising more rapidly than exports for the US, leading
to widening in the deficit that is weighing on growth.
Figure 2: Two measures of home sales
Mn, saar 000s, saar
Virus news remains important
7.0 Existing New single-family 1000
home sales home sales While most economic indicators showed solid momentum
6.5
900 through October or November, we still think that the surge in
6.0
800
new COVID-19 cases from recent months is meaningfully
5.5
impacting the economy. Virus-related developments (com-
5.0 700 bined with the onset of colder weather) almost certainly con-
4.5
600 tributed to the decline in consumer spending in November,
4.0 and we think that they also have led to increased layoffs in
3.5 500 recent weeks (Figure 4). Given signs of weakening in the la-
2016 2017 2018 2019 2020 2021
Source: NAR, Census Bureau, J.P. Morgan bor market, we believe that nonfarm employment fell by
25,000 in December. We also forecast that the unemployment
rate held at 6.7% in December, with a decline in participation
Indicators of business investment also have lost some steam
preventing a move up in the rate despite weakness expected in
lately, but while BFI growth should cool between 3Q and 4Q,
employment.
the 4Q growth figure still should be robust by pre-pandemic
standards. In part because core capital goods orders and ship- Figure 4: Initial jobless claims in regular state programs
ments continued to push higher rapidly into November (Fig- Mn, sawr
ure 3), we think that real equipment spending should be up 1.6
around 25-30% saar in 4Q. The monthly readings on invento-
ries have been mixed lately, but we think that inventories will 1.4
increase on net in 4Q following four straight quarterly de- 1.2
clines in the BEA data on real business inventories reported
through 4Q. Nonresidential construction has looked weak 1.0
lately and could continue to be negatively impacted by the 0.8
pandemic as demand for things like new office buildings and
malls is depressed. But with some separate measures of ener- 0.6
Jun 6, 2020 Jul 27, 2020 Sep 17, 2020 Nov 8, 2020 Dec 30, 2020
gy extraction picking up in 4Q (off of low levels), we think Source: Department of Labor, J.P. Morgan
that overall nonresidential structures investment will be close
to unchanged in 4Q, a solid improvement over the 17% saar
Overall, we think that the recent spread of the virus (and jump
drop in 3Q (and 25% average annualized fall across 2Q and
in hospital utilization rates) combined with colder weather
3Q).
will restrain activity noticeably in both December and Janu-
Figure 3: Core capital goods orders and shipments ary. But added fiscal support should be coming soon, and
$bn, sa warmer weather and the vaccine rollout should alleviate some
72
of the pressure caused by the virus over time, even if it will
take a while for the vaccine to reach a large share of the popu-
70 Orders lation. Virus-related developments, both good and bad, will
68
remain important to monitor as we think about the outlook.
66
64
62
60
Shipments
58
2016 2017 2018 2019 2020 2021
Source: Census Bureau, J.P. Morgan
11
Michael Feroli (1-212) 834-5523 United States
michael.e.feroli@jpmorgan.com December 31, 2020
Daniel Silver (1-212) 622-6039
daniel.a.silver@jpmorgan.com
Data releases and forecasts Tue ISM manufacturing survey

Jan 5 Sa
Mon Markit manufacturing PMI 10:00am Sep Oct Nov Dec
Jan 4 Index, sa Overall index 55.4 59.3 57.5 56.5
9:45am Flash Final Production 61.0 63.0 60.8
Oct Nov Dec Dec New orders 60.2 67.9 65.1
Composite1 53.4 56.7 56.5 56.3 Inventories 47.1 51.9 51.2
New orders (30%) 53.9 57.4 55.7 Employment 49.6 53.2 48.4
Output (25%) 53.3 59.2 57.3 Supplier deliveries 59.0 60.5 61.7
Employment (20%) 51.9 51.7 52.1 Export orders 54.3 55.7 57.8
Sup. del. (15%, inv.) 42.7 37.0 32.4 Imports 54.0 58.1 55.1
Stks of purch (10%) 48.9 48.5 48.7 Prices 62.8 65.5 65.4
New export orders 49.3 50.5 50.3
We forecast that the ISM manufacturing survey’s head-
Backlogs of work 50.4 55.7 52.2
line composite declined 1.0-pt to 56.5 in December. The
Output prices 51.9 56.1 58.8
recent data for the survey have looked stronger than
Input prices 57.1 61.6 65.4
some of figures reported in other manufacturing business
Stocks of finished goods 50.3 49.4 48.6
surveys, so we expect some cooling in the upcoming
Quantity of purchases 52.4 53.5 52.7
ISM report. Weakening in the ISM data would also be
ISM-weighted composite2 53.1 56.0 56.3 consistent with the idea that virus-related developments
1. Weights in parentheses have been weighing on the economy lately.
2. Attributes ISM-composite weights (equal weights) to corresponding PMI series
We look for the Markit manufacturing PMI survey’s
headline composite to be revised down from 56.5 to 56.3
between the flash and final December reports, showing a Tue Motor vehicle sales
0.4-pt decline relative to November. Some other manu- Jan 5 Millions, saar
facturing surveys have shown noticeable weakening in Sep Oct Nov Dec
recent months, but the PMI data cooled only slightly in Light trucks and autos 16.3 16.3 15.6 16.3
the flash December report and still looked pretty upbeat. Imports 3.5 3.5 3.6
We therefore think that we are due for some moderation Domestics 12.8 12.8 12.0
in the PMI data and expect the December figure to be re- Autos 2.9 3.0 2.9
vised lower. Light trucks 9.9 9.8 9.1
We look for light vehicle sales of 16.3mn saar in De-
Mon Construction spending cember based on industry guidance. This would be a sol-
Jan 4 %m/m, sa id step up from the November sales rate and one of the
10:00am Aug Sep Oct Nov strongest monthly readings since the pandemic began,
Nominal 2.0 -0.5 1.3 1.2 but it would keep sales below the trend that was reported
Private 3.2 -0.4 1.4 1.5 before COVID-19 started significantly impacting the US
Residential 6.9 0.6 2.9 2.9 economy.
Nonresidential -1.3 -1.7 -0.7 -0.5
Public -1.6 -0.7 1.0 0.5
We estimate that nominal construction spending in- Wed ADP employment
creased 1.2% in November. There have been strong in- Jan 6 Change from month ago, sa
creases reported for private residential spending in recent 8:15am Sep Oct Nov Dec
months, and we think that this strength carried over into ADP 754 404 307
November, with related spending jumping another 2.9%. BLS private payroll 930 877 344
Private nonresidential spending has been trending lower In last month’s reports, the ADP employment report
lately, and we look for another decline in November, showed that private payrolls increased by 307,000 in
with spending falling 0.5%. Public construction spending November while the BLS data showed private payrolls
fell sharply between June and September, but it in- rising 344,000. This continued the recent streak of the
creased 1.0% in October and we think that another por- ADP data underestimating the monthly change in the
tion of the earlier drop will be reversed in November, BLS data when comparing first prints, but the size of the
with spending rising 0.5%. deviations between the reports has varied. We continue
to think that the ADP report is not a very reliable indica-
tor of the BLS data, and we do not know if the recent
trend of the ADP report undershooting the BLS report
will continue or not.
Sources: ADP/Moody’s Analytics, BEA, BLS, Census Bureau, Conference Board, Department of
Labor, Federal Reserve Board, ISM, J.P. Morgan forecasts, NAHB, NAR, NFIB, NY Fed, Markit,
Philadelphia Fed, Standard & Poor’s, University of Michigan, US Treasury
12
Michael Feroli (1-212) 834-5523 Global Data Watch
Wed Markit services PMI Thu International trade

Jan 6 Index, sa Jan 7 $billion, samr
9:45am Flash Final 8:30am Aug Sep Oct Nov
Oct Nov Dec Dec Balance(BOP basis) -64.9 -62.1 -63.1 -67.8
Business activity 56.9 58.4 55.3 55.0 Services 19.0 18.7 18.3 18.0
Incoming new business 55.6 57.6 55.0 Merchandise -83.9 -80.8 -81.4 -85.8
Employment 53.4 57.8 53.9 Exports (%m/m) 2.2 2.4 2.2 0.7
Business expectations 70.5 79.4 74.2 Imports (%m/m) 3.2 0.6 2.1 2.4
Input prices 54.2 63.7 64.8 We forecast that the nominal trade balance widened from
Prices charged 53.4 59.7 55.6 -$63.1bn in October to -$67.8bn in November, with ex-
Backlogs of work 51.0 52.0 50.0 ports increasing 0.7% and imports jumping 2.4%. The
We look for the Markit services PMI’s headline activity advance data on nominal goods trade showed widening
index to be revised down from 55.3 to 55.0 between the in the deficit in November with stronger growth in im-
flash and final December reports, showing a 3.4-pt drop ports than exports, and we think this will be evident in
relative to the final November reading. Even with the de- the full trade report for the month. We also think that
cline in the index shown in the flash December release, services imports will keep increasing more rapidly than
the recent PMI data looked pretty strong and more favor- services exports through November.
able than some other business surveys. We therefore ex-
pect additional cooling to be reported in the upcoming
release. Thu ISM services survey
Jan 7 Sa
10:00am Sep Oct Nov Dec
Wed Factory goods report Nonmfg. index (NMI) 57.8 56.6 55.9 55.0
Jan 6 %m/m, sa, unless noted Business activity 63.0 61.2 58.0
10:00am Aug Sep Oct Nov New orders 61.5 58.8 57.2
New orders 0.6 1.3 1.0 0.6 Employment 51.8 50.1 51.5
Shipments 0.3 0.5 1.0 0.3
Prices 59.0 63.9 66.1
Inventories 0.0 -0.1 0.2 0.8
Inventory/sales ratio 1.43 1.42 1.41 1.41
We believe the ISM services survey’s headline compo-
site fell 0.9-pt to 55.0 in December. Data from the sepa-
We estimate that new orders for factory goods increased
rate services PMI weakened noticeably during the
0.6% in November while related shipments rose 0.3% month, and while the ISM and PMI data do not always
and inventories increased 0.8%. The advance durable align closely, we think that this suggests that the ISM da-
goods report already showed increases in orders (1.3%), ta should cool in the upcoming report. We also think that
shipments (0.5%), and inventories (1.0%) in November, recent virus-related developments are weighing on the
and we also look for gains in the nondurables data for the services sector, and these could also lead to weakening in
month, in part based on increases in related pricing. For the ISM survey.
the nondurables data, we forecast that orders and ship-
ments increased 0.4% in November while inventories
rose 0.5%.
13
Fri Labor-market report Given that the COVID-19-related developments could be

Jan 8 Sa adversely impacting low-wage industries more than
8:30am Sep Oct Nov Dec high-wage industries, we think that a change in employ-
Payroll employment ment composition could help push average hourly earn-
(ch, m/m, 000s) 711 610 245 -25 ings up 0.3% in December. We look for the average
Private payrolls 930 877 344 0 workweek to hold at 34.8 hours as it has done in recent
Goods-producing 97 107 55 25 months, with the aggregate hours index basically un-
Construction 35 72 27 15 changed between November and December.
Manufacturing 60 33 27 10 For the household survey, we think that the unemploy-
Service-providing 614 503 190 -50 ment rate held at 6.7% between November and Decem-
Private service-providing 833 770 289 -25 ber. Employment in the household survey likely will be
Wholesale trade 33 5 10 weak, but we think that participation could also be nega-
Retail trade 15 95 -35 tively impacted by recent developments, leading to an
Professional services 127 231 60 unchanged unemployment rate after rounding. For the
Temporary help 25 123 32 participation rate, we forecast a tick down from 61.5% in
Education/health 60 62 54 November to 61.4%, and we believe that the employ-
Leisure and hospitality 413 270 31 ment-population ratio held at 57.3% between these
Government -219 -267 -99 -25 months.
Average weekly hours 34.8 34.8 34.8 34.8
Index, hrs worked (%m/m) 1.1 0.8 0.3 0.0
Hourly earnings (%m/m) 0.1 0.1 0.3 0.3
Review of past two week of data
(%oya) 4.7 4.4 4.4 4.6
Unemployment rate (%) 7.9 6.9 6.7 6.7 Gross domestic product (Dec 22)
Participation rate (%) 61.4 61.7 61.5 %ch, q/q, saar, unless noted
Adv Sec Thi
We forecast that nonfarm employment declined 25,000 3Q20 3Q20 3Q20
in December while the unemployment rate held at 6.7%. Real GDP 33.1 33.1 33.2 33.4
There are many signs that the economy has weakened Final Sales 25.5 25.6 26.5 25.9
lately, and we think that recent virus-related develop- Domestic final sales 29.2 29.4 29.7 29.8
Consumption 40.7 40.6 40.8 41.0
ments combined with the onset of colder weather have Equipment 70.1 66.6 66.6 68.2
been weighing on activity. Job growth already had been Intellectual property -1.0 6.0 6.5 8.4
decelerating for a few months through November, and Nonres. structures -14.6 -15.8 -17.3 -17.4
we think things have been worse in the labor market Residential investment 59.3 62.3 63.0
since the mid-month reference week used for the No- Government -4.5 -4.9 -4.8
Exports 59.7 60.5 59.5 59.6
vember data. Initial claims filings in regular state pro- Imports 91.1 93.1 92.8 93.1
grams moved up between the reference weeks for the Inventories (ch, $bn) -1.0 -4.3 -0.1 -3.7
November and December employment reports, signaling Net exports-pct.pt.contr. -3.1 -3.2 -3.2
increased layoffs. And while continuing claims filings Inventories-pct.pt.contr. 6.6 6.6 6.7 6.6
Core PCE price index 3.5 3.5 3.4
for regular state programs generally have continued to (%oya) 1.4 1.4 1.4
trend lower lately, the pace of decline has moderated, GDP chain price index 3.6 3.6 3.5
pointing to cooling in the labor market. Furthermore, our (%oya) 1.1 1.1 1.1
tracking of some alternative data sources suggests that Adj. corporate profits 27.1 27.4
job growth pulled back substantially in December; that (%oya) 3.3 3.5
said, we think that this signal overweights some of the The BEA’s updated data show that real GDP surged 33.4%
sectors most affected by the virus and is likely more saar in 3Q. The main story behind the 3Q GDP data has not
downbeat than what the BLS data will show. changed much in recent months, and we have known for a
Given these signs of weakening, we expect the employ- while that GDP surged by a record large amount during the
ment changes for many sectors to weaken in December quarter following the record large 2Q plunge, with the recov-
relative to both November and the recent trends. We ery partial to date. But the updated figures came out a few
think the leisure and hospitality sector could be impacted tenths above the BEA’s estimate released late in November
more noticeably by the virus than some other areas, and (33.1%), and they were slightly above expectations for this
we look for employment in this grouping to fall by close recent report. In some of the main categories related to
to 100,000 in December. We also look for a decline in growth, the 3Q reading on real domestic final sales growth
retail employment in December. For the private sector was revised up from 29.4% to 29.8% saar, there was a slight
overall, we forecast that employment was basically un- upward revision to the inventory data, and a modest down-
changed between November and December. We also ward revision to the net exports data.
look for a 25,000 decline in government employment.
Changes in temporary Census employment look to be
only a slight drag on government payrolls for December Sources: ADP/Moody’s Analytics, BEA, BLS, Census Bureau, Conference Board, Department of
(following larger declines in earlier months), but we Philadelphia Fed, Standard & Poor’s, University of Michigan, US Treasury
think that the trend in government employment away
from the Census will remain weak.
14
Michael Feroli (1-212) 834-5523 Global Data Watch
Consumer confidence Durable goods (Dec 23)

Sa %m/m, sa
Oct Nov Dec Sep Oct Nov
Conference Bd index 101.4 96.1 92.9 100.0 88.6 New orders 2.1 1.3 1.8 1.5 0.9
Present situation 106.2 105.9 90.3 Ex transportation 1.5 1.3 1.9 0.4 0.4
Jobs plentiful 26.7 26.7 26.3 21.8 Nondef cap. gds ex 1.9 0.8 1.6 0.4 0.4
Jobs hard to get 19.6 19.5 19.4 22.0 Shipments 0.5 1.3 1.5 0.7 0.3
Labor mkt diff 7.1 7.2 6.9 -0.2 Nondef cap. gds ex 0.8 2.4 2.6 0.7 0.4
Expectations 98.2 89.5 84.3 87.5 Inventories 0.3 0.2 0.3 0.9
The Conference Board consumer confidence index dis- The November durables report was not far from expectations
appointed expectations, falling from 92.9 in November and kept real equipment spending on track for strong growth
to 88.6 in December. This December figure was on the in 4Q (likely around 25-30% saar). Total orders increased
low end of the range reported since the pandemic began, 0.9% while orders rose 0.4% away from transportation. For
and the message from the Conference Board data con- core capital goods, orders and shipments both increased 0.4%
trasted with that of the sentiment index reported by the in November.
University of Michigan; the December data for the Uni-
versity of Michigan measure showed an increase in sen-
timent during the month and one of the firmer readings Consumer sentiment (Dec 23)
since the pandemic began. The Conference Board sur- Pre Fin
vey’s labor market differential also weakened in Decem- Nov Dec Dec
ber, declining from 6.9 to -0.2, suggesting recent deterio- Univ. of Mich. Index 76.9 81.4 81.0 80.7
ration in the job market. Current conditions 87.0 91.8 90.0
Expectations 70.5 74.7 74.6
Inflation expectations
Short-term 2.8 2.3 2.5
Existing home sales (Dec 22) Long term 2.5 2.5 2.5
Sep Oct Nov The University of Michigan consumer sentiment index was
Total (mn, saar) 6.57 6.85 6.86 6.70 6.69 revised down between the preliminary and final December re-
%m/m 9.9 4.3 4.4 -2.2 -2.5 ports but still showed firming in sentiment relative to Novem-
%oya nsa 25.1 24.0 25.9 21.8
Months’ supply (nsa) 2.7 2.5 2.3
ber.
Single-family 2.5 2.4 2.3 2.2
Median price (%oya) 14.7 15.5 14.6
Existing home sales declined 2.5% to 6.69mn saar in Novem- New home sales (Dec 23)
ber. This decline was close to expectations and reversed only
a small portion of the earlier recent surge in sales. Sep Oct Nov
Total (000s,saar) 1002 965 999 945 1000 841
%m/m 0.1 -1.2 -0.3 -2.1 0.1 -11.0
Personal income (Dec 23) %oya nsa 41.1 37.5 45.5 38.2 43.7 18.0
%m/m, sa, unless noted Months’ supply 3.3 3.5 3.3 3.6 4.1
Sep Oct Nov Median price (%oya) 5.0 7.9 2.5 4.7 2.2
Personal income 0.7 0.8 -0.7 -0.6 -0.1 -1.1 The November new home sales report disappointed in terms
Wages & salaries 0.9 0.7 0.5 0.4 of both an unexpectedly large drop in sales in November
Consumption 1.2 1.3 0.5 0.3 -0.8 -0.4
Real consumption 1.1 0.5 0.3 -0.8 -0.4 (-11.0%) and also downward revisions to data that had been
PCE price index 0.2 0.0 0.0 0.0 previously released. Even with this recent weakening in the
Core 0.18 -0.01 0.02 -0.02 0.01 data, the November sales rate was still well above the pre-
Mkt-Based Core 0.1 0.0 0.0 pandemic trend.
Core (%oya) 1.6 1.5 1.4 1.3 1.4
Mkt-Based Core 1.5 1.3 1.3
Saving rate 14.6 14.4 13.6 14.2 12.9
Real consumer spending fell 0.4% in November, disappoint- International trade (adv.)
ing consensus expectations slightly but not looking as down- $bn, samr, unless noted
beat as our forecast. We think spending will continue to pull Sep Oct Nov
back in December, but given the solid start to the fourth quar- Balance of goods, Cen. -83.1 -79.4 -80.6 -80.3
ter, we believe real consumption could still be up a solid Exports (%samr) 2.9 3.2 0.6 2.8
amount in 4Q on average. Elsewhere in the report, personal Imports (%samr) 3.3 0.0 1.0 2.2
income disappointed expectations, falling 1.1% in November The nominal goods trade balance widened from -$80.4bn in
as a variety of fiscal supports faded. And there was basically October to -$84.8bn in November, with this latest reading
no change in the PCE and core PCE price indexes between wider than our forecast and more of a surprise relative to con-
October and November, with the headline index up 1.1% oya sensus expectations. The goods deficit generally has been
and the core measure up 1.4% oya. widening since early in 2020, and the November figure was
the largest nominal deficit on record back to 1948.
15
Business inventories (adv.)

%m/m, sa, unless noted
Sep Oct Nov
Wholesale 0.9 1.1 1.2 0.7 -0.1
Retail inventories 1.6 0.9 0.1 0.7
Ex autos 1.0 0.8 0.9 0.3 0.3
Autos 3.1 1.0 1.1 -0.4 1.5
There were mixed surprises in the November inventory data
in the advance economic indicators report, with retail invento-
ries looking stronger than expectations (+0.7%) and whole-
sale inventories disappointing (-0.1%). Overall, it still looks
like inventories started to move higher in 4Q following four
straight quarterly declines in real business inventories report-
ed in the NIPA data through 3Q.
Pending home sales

sa, unless noted
Sep Oct Nov
Total (mn, ar) 130.3 128.9 129.1 129.5 125.7
%ch m/m -2.0 -1.1 -0.9 0.5 -2.6
%oya (nsa) 22.2 19.5 19.7 19.9 16.0
The pending home sales index declined 2.6% in November.
This disappointed expectations, and the index has now de-
clined in three straight months. Even with this recent cooling,
the latest level for the index was still well above the trend
from before COVID-19 started spreading, and several other
housing indicators still show upbeat levels of activity despite
some recent softening.
16
J.P. Morgan Securities plc Economic Research
Marco Protopapa (44-20) 7742-7644 Greg Fuzesi (44-20) 7134-8310 Global Data Watch
marco.protopapa@jpmorgan.com greg.x.fuzesi@jpmorgan.com December 31, 2020
Raphael Brun-Aguerre (44-20) 7134-8308
raphael.x.brun-aguerre@jpmorgan.com
(Figure 3). Of course, the latter does not imply that German
Euro area GDP is rising rather than falling, given that some sectors are
 Euro area GDP to fall sharply in 4Q20 and recover facing lockdowns and are therefore producing little or no out-
strongly only in 2Q21 and 3Q21 put. However, it may signal ongoing strength in German indus-
try and increased online shopping, which could offset some of
 Holidays are distorting data on new COVID-19 infec- the weakness in services.
tions and Google mobility
Figure 2: French and Spanish retail sales
 Risk skewed to slower easing of restrictive measures in
1Q15 = 100
near term, but vaccine rollout brightens the outlook
115
France
110
Our forecasts project a steep fall in Euro area GDP in 4Q20 105
(-10%q/q saar), followed by a modest gain in 1Q21 (2%) and 100
95
a strong 10% recovery in 2Q21 and 9% in 3Q21. Against this
90
backdrop, two developments are important to track. First, the 85
magnitude of the initial fall in activity. Second, the evolution 80 Spain
of COVID-19 infections given that these will determine the 75
speed at which restrictions will be eased. Unfortunately, visi- 70
2018 2019 2020 2021
bility is low on both factors. Source: INSEE, INE, J.P. Morgan
One way we have been tracking Euro area GDP on a high- Figure 3: German lorry toll index
frequency basis is through the Google activity data. Our Idx, wda and sa
Google Composite index has plunged in recent days (Figure 120
1). At face value, this suggests huge downside risks. Howev-
er, the fall likely reflects distortions over the Christmas peri- Daily
od, given that the Google data are not adjusted for seasonal 110
effects and that most of the fall occurred in the last few days
before the holidays. At the country level, there has been an 100 Monthly averages
underlying deterioration in Germany, reflecting the stricter
lockdown from mid-December onwards. But, there have also
90
been improvements in countries that have eased some re-
Jan 20 Mar 20 May 20 Jul 20 Aug 20 Oct 20
strictions. Overall, the Google data suggest only modest Source: Destatis, J.P. Morgan
downside risks.
Figure 1: Euro area activity Tracking the evolution of new COVID-19 infections is also
Index vs. pre-virus normal Index vs. pre-virus normal
difficult over the holiday period. For example, in Germany, the
number of tests likely fell due to the holidays, and there are also
JPM weekly GDP 105
100 likely some delays in the reporting of new infections through
100
90 the local health departments. Hence, the decline in new infec-
95 tions is unlikely to reflect true improvement, and we will have
80
90 to wait until early January for a clearer view (Figure 4).
70 85
Google Composite
60 (avg. of retail, at home, at work) 80 Figure 4: Germany - new COVID-19 infections
50 75 New infections per day, 7-day avg.
40 70 30000
Jan 20 Apr 20 Jul 20 Sep 20 Dec 20 25000
Source: Google, J.P. Morgan estimates.
20000
Other data are still scarce. Early national reports on retail sales 15000
have shown a huge collapse in France (-18%m/m) in November 10000
and barely any impact of the tightened restrictions in Spain (- 5000
0.3%m/m, Figure 2). At the same time, the German lorry toll 0
index, which proxies the amount of lorry traffic on the motor- Jan 1, 20 Mar 9, 20 May 16, 20 Jul 23, 20 Sep 30, 20 Dec 7, 20
ways, has continued to strengthen right up to 22 December Source: Robert Koch Institute, J.P. Morgan
17
Marco Protopapa (44-20) 7742-7644 Greg Fuzesi (44-20) 7134-8310 Euro area
The risk is skewed in the direction of a slower removal of the slightly in November, while the German labor market report
COVID-19 restrictions than assumed in our forecast. German for December will show another increase in short-time work
policymakers are set to meet in early January to discuss the applications and only a slight increase in unemployment.
current measures, which are set to expire on January 10. It is
increasingly difficult to see significant loosening of the re- On the inflation side, the flash HICP report for December will
strictions and there could even be some tightening. In particu- likely show core inflation remaining at 0.2%oya. With Ger-
lar, the incidence of new infections is currently at 150 cases many’s temporary VAT cut ending in January, core inflation
over 7 days per 100,000 inhabitants (despite the downward is likely to increase to 0.7%oya next month. But that still is
distortion due to the holidays), far above the 50 cases maxi- far below the ECB’s target, with services inflation accounting
mum that is needed to safeguard the efficacy of the test-and- for much of the decline during the COVID-19 crisis. Of
trace efforts. A further tightening of restrictions would be course, the ECB announced further TLTRO-IIIs and addition-
inconsistent with our forecast, even though we note that the al PEPP purchases, but none of this is likely to materially jolt
gap between key high-frequency indicators makes it hard to the ECB staff’s inflation projections. It seems that the central
assess by how much German GDP has declined so far in the bank has shifted its focus from achieving its target over a rea-
current lockdown (Figure 5). sonable timescale to keeping financial conditions very ac-
commodative and then being patient. In particular, some poli-
Figure 5: German GDP and daily trackers cymakers have expressed concern about the efficacy of mone-
4Q19 = 100, 7-day averages of daily indicators tary policy in boosting growth further and about potential
Weekly GDP Lorry toll index
110 side-effects.
(dotted is quarterly)
105
100 Brexit deal reduces a near-term risk
95 1Q20
3Q20
Our Euro area growth forecast has assumed a “skinny” deal
90
between the EU and UK. This is essentially what has now
85
2Q20 Google
been agreed. Our forecast projects that this creates a 1.5%-pt
80 drag on UK GDP and 0.3%-pt on Euro area GDP. The rela-
Composite
75 tive impacts reflect the fact that a given monetary cost is a
Feb 20 Jun 20 Nov 20 Mar 21
Source: Destatis, Google, OpenTable, J.P. Morgan lower share of Euro area than of UK GDP given the relative
sizes of the economies. Our assumption is that the relatively
modest impact on Euro area GDP will get lost in the much
While tracking current developments is clearly difficult, it is
bigger swings caused by COVID-19.
encouraging that the rollout of vaccines has started. The Eu-
ropean Medicines Agency granted a conditional authorization
However, it will still be important to watch the actual impact
to a first vaccine on 23 December. And despite the holiday
of Brexit, given that the trading relationship between the Euro
period, around 78,000 vaccinations have now been given in
area and the UK is changing fundamentally even with the
Germany. Of course, it will take some time before vaccina-
deal. For example, exports may have increased ahead of the
tions reach a large enough scale to impact the spread of
31 December Brexit date of as producers stockpiled inputs.
COVID-19. But, at least the process has started.
This can then result in payback during 1Q21, which could be
amplified by disruptions at the borders. So far, the trade data
Next week: Low inflation shows ECB task through October have not shown a big swing, but this will
Next week, the daily data on new COVID-19 infections will need to be watched. Beyond the near-term swings, it will also
reveal how high the incidence was in the run-up to the holi- be important to watch how much of a structural change the
days. However, the impact of household mixing over the hol- new trading relationship causes, for example in terms of busi-
iday period may not become apparent for another 1-2 weeks. ness relocations and adjustments. It is too early to assess this,
In addition, the Google mobility data may also normalize only especially as the agreement on a deal creates a level of coop-
in 1-2 weeks after the holiday period has ended. In terms of eration that may act to manage such shifts over more suitable
the regular data flow, next week’s data are likely to show an- timescales.
other strong IP gain in Germany and a steep fall in France
(due to the stricter lockdown). Retail sales data are also likely
to highlight the acute November weakness in France, with
other countries holding up better overall. In terms of the labor
markets, we expect the short-time work subsidy schemes to be
effective once again at preventing any large-scale job losses.
The Euro area unemployment rate may have edged up only
18
Data releases and forecasts Manufacturing orders

Aug Sep Oct Nov
Week of January 4 – 7
Thu Germany
Jan 7 Volumes, sa
Output and surveys 8:00am Total (%m/m) 4.9 1.1 2.9 1.0
Purchasing managers index final (manufacturing) %oya -1.5 -1.2 1.9
Sep Oct Nov Dec Total ex. bulk orders (%m/m) 4.3 4.8 1.7
Mon Euro area %oya -3.3 0.5 4.5
Jan 4 Overall region 53.7 54.8 53.8 55.5 Domestic (%m/m) 2.7 2.7 2.4
10:00am %oya -2.6 -1.2 3.4
9:55am Germany 56.4 58.2 57.8 58.6 Foreign (%m/m) 6.4 0.0 3.2
9:50am France 51.2 51.3 49.6 51.1 %oya -0.7 -1.1 0.8
9:45am Italy 53.2 53.8 51.5 German orders likely increased further in November, even
9:15am Spain 50.8 52.5 49.8 though they had already recovered back to the Jan/Feb lev-
el in October. First, the VDA car production data showed
Purchasing managers index final (services) another strong increase in output in November. Second, the
Sep Oct Nov Dec new orders index of the German manufacturing PMI fell
Wed Euro area 4pts in November, but this left it at a very high level of
Jan 6 Overall region 48.0 46.9 41.7 47.3 62.4. In addition, the manufacturing PMI increased again
10:00am in December.
9:55am Germany 50.6 49.5 46.0 47.7 Industrial production
9:50am France 47.5 46.5 38.8 Aug Sep Oct Nov
9:45am Italy 48.8 46.7 39.4 Fri Germany
9:15am Spain 42.4 41.4 39.5 Jan 8 Industry incl constr (%m/m, sa) 0.5 2.3 3.2 2.5
8:00am %oya, sa -9.0 -6.6 -2.7
Purchasing managers index final (composite) Industry ex constr (%m/m, sa) 0.2 2.3 3.4 2.8
Sep Oct Nov Dec Manufacturing (%m/m, sa) 0.1 2.3 3.1 3.0
Wed Euro area Construction (%m/m, sa) 2.0 2.1 1.6 1.0
Jan 6 Overall region 50.4 50.0 45.3 49.8 Energy (%m/m, sa) 1.9 3.2 4.1 1.0
10:00am German IP likely posted another strong increase in No-
9:55am Germany 54.7 55.0 51.7 52.5 vember. VDA car production has already shown a double-
9:50am France 48.5 47.5 40.6 49.6 digit gain, while the manufacturing PMI remained at a very
9:45am Italy 50.4 49.2 42.7 strong level throughout 4Q20. Finally, the level of IP in
9:15am Spain 44.3 44.1 41.7 October was still almost 6% below the Jan/Feb level,
The flash estimate of the Euro area composite PMI showed which suggests scope for further catch-up.
a rebound in December, which we expect to be confirmed
in the final report. There is a risk that the new lockdown in Aug Sep Oct Nov
Germany weighed on the PMI at the end of the sample. Fri France
But it is not clear that any revision will be large (e.g., the Jan 8 Ind production (%m/m, sa) 1.1 1.6 1.6 -5.0
retail sector, which is subject to new closures in Germany, 8:45am %oya, sa -6.4 -5.9 -4.2
is excluded from the PMI). Overall, confirmation of the re- Manuf prod (%m/m, sa) 0.7 2.3 0.5
bound in December would be encouraging, although it re- The French government imposed a new lockdown at the
mains very difficult to link outturns in the PMI to outturns start of November that mostly will impact the services sec-
in GDP. tor. But we also expect French IP to come down as firms
will adjust to domestic demand. IP should then rebound to
European Commission survey a significant extent in December.
Sep Oct Nov Dec
Thu Euro area
Jan 7 % balance of responses, sa Source: European Commission, Eurostat, ECB, FSO, Bundesbank, IFO, INSEE, ISAE, Istat, INE,
11:00am Economic confidence 90.9 91.1 87.6 91.0 CBS, BNB, Markit, and J.P. Morgan forecasts
Manufacturing confidence -11.4 -9.2 -10.1
Construction confidence -9.5 -8.3 -9.3 Demand and labor markets
Retail confidence -8.6 -6.9 -12.7
Service confidence -11.2 -12.1 -17.3 Retail sales
Consumer confidence -13.9 -15.5 -17.6 -13.9 Aug Sep Oct Nov
Euro area consumer confidence improved sharply in the Thu Euro area
flash release for December with an increase of almost 4pts. Jan 7 Total sales, volumes
The flash composite PMI also points to an improvement in 11:00am %m/m, sa 4.2 -1.7 1.5 -5.0
the business sector, caused by the loosening of restrictions %oya, working-day adj. 4.4 2.5 4.3
in some countries.
19
Marco Protopapa (44-20) 7742-7644 Greg Fuzesi (44-20) 7134-8310 Euro area
Euro area retail sales likely fell sharply in November, re- %oya 3.5 -0.8 2.7
flecting very uneven developments across countries. Retail
sales in France are already reported to have slumped
18%m/m, while spending in Spain was broadly stable. This
External trade and payments
would leave the Oct/Nov average of retail spending around Foreign trade
5% annualized below the 3Q20 level in the Euro area. Aug Sep Oct Nov
Aug Sep Oct Nov Fri Germany
Tue Germany Jan 8 € bn, values, sa
Jan 5 Sales ex. autos and petroleum, volumes, sa 8:00am Trade balance 15.4 17.6 18.2
8:00am %m/m 1.9 -1.5 2.6 0.0 year earlier 19.3 19.5 20.3
%oya 6.7 4.9 7.9 Exports 101.6 103.9 104.8
German retail sales may have been stable in November. %m/m 2.9 2.3 0.8
While November was affected by a partial lockdown, the Imports 86.2 86.3 86.6
closure of nonessential retail shops came only in mid- %m/m 5.8 0.2 0.3
December. In addition, the impending increase in VAT in
January, following the temporary reduction, may have be- Inflation
gun to boost some spending. As a result, we expect no
payback from October’s large gain. Consumer prices
Sep Oct Nov Dec
Unemployment Thu Euro area (flash)
Aug Sep Oct Nov Jan 7 HICP (%oya, nsa) -0.3 -0.3 -0.3 -0.2
Fri Euro area 11:00am HICP core (%oya, nsa) 0.2 0.2 0.2 0.2
Jan 8 Harmonized measure (Eurostat)
11:00am Unemployment rate (%, sa) 8.6 8.5 8.4 8.6 Sep Oct Nov Dec
Unemployment (ch m/m, 000s) -111.0 -118.0 -86.0 Wed Germany (prelim)
The Euro area unemployment rate likely increased modest- Jan 6 %m/m, nsa -0.2 0.1 -0.8 0.6
ly in November. Countries that have already reported data 2:00pm %oya -0.2 -0.2 -0.3 -0.2
are broadly stable, with declines of 0.3%-pt in the Nether- HICP (%oya) -0.4 -0.5 -0.7 -0.6
lands and Finland, and an increase of 0.3%pt in Ireland. Of Baden Wuerttemberg (%oya) 0.0 0.0 0.1 0.1
course, the new lockdowns are likely to have caused a sig- Bavaria (%oya) -0.2 -0.1 -0.2 -0.1
nificant fall in GDP in November, but this likely led to re- Brandenburg (%oya) -0.2 -0.1 -0.2 -0.2
newed increases in short-time work, rather than unem- Hesse (%oya) -0.5 -0.6 -0.6 -0.5
ployment. North-Rhine West (%oya) -0.3 -0.2 -0.4 -0.3
Saxony (%oya) 0.1 0.0 0.1 0.1
Sep Oct Nov Dec
Tue Germany
Sep Oct Nov Dec
Jan 5 Registered (ch m/m, 000s, sa) -12 -38 -39 15 Tue France (prelim)
9:55am 000s, nsa 2847.1 2759.8 2699.1 Jan 5 %m/m, nsa -0.5 0.0 0.2 0.4
Unempl. rate (%, sa) 6.3 6.2 6.1 6.1 8:45am %oya, nsa 0.0 0.0 0.2 0.2
HICP (%oya) 0.0 0.1 0.2 0.1
Employment We expect Euro area core inflation to remain stable at
Aug Sep Oct Nov 0.2%oya in December. Core inflation this year declined by
Tue Germany around 1%-pt. This move down was largely driven by an
Jan 5 Change m/m, 000s, sa 7 25 20 0 inflation fall in holiday-related items, sectors which have
9:55am been hit hard by the crisis. The German VAT cut in July
The German labor market was still solid in November, de- from 19% to 16% also contributed to this decline. In Janu-
spite the partial lockdown. Short-time work applications ary, this VAT rate will return to 19%, and we expect Euro
did increase sharply, but by much less than in the spring, area inflation to rebound to increase to 0.7%oya.
and the official unemployment rate fell further. We expect
some modest deterioration in December in the headline
numbers and a further increase in short-time work. But, Producer prices
relative to the size of the renewed economic shock, the la- Aug Sep Oct Nov
bor market impact will continue to look modest. Wed Euro area
Jan 6 %m/m, nsa 0.1 0.4 0.4
Domestic consumption
11:00am %oya, nsa -2.6 -2.3 -2.0
Aug Sep Oct Nov
Fri France
Jan 8 Consumption of goods, volumes, swda
8:45am %m/m 2.2 -4.4 3.7
20
Source: European Commission, Eurostat, ECB, FSO, Bundesbank, IFO, INSEE, ISAE, Istat, INE, %oya, nsa -0.8 -0.8 -0.5
CBS, BNB, Markit, and J.P. Morgan forecasts HICP (%oya, nsa) -1.0 -0.9 -0.7 -0.6
Financial activity and public finance Oct Nov Dec

Belgium CPI
Money and credit data %m/m, nsa 0.2 -0.2 0.0
Aug Sep Oct Nov %oya, nsa 0.7 0.5 0.4
Tue Euro area
Jan 5 M3 (%m/m sa) 0.3 1.1 0.5
10:00am M3 (%oya) 9.5 10.4 10.5
Source: European Commission, Eurostat, ECB, FSO, Bundesbank, IFO, INSEE, ISAE, Istat, INE,
M3 (%oya 3mma) 9.6 10.0 10.1 CBS, BNB, Markit, and J.P. Morgan forecasts
Loans (%oya)1. 4.6 4.6 4.6
Loans (m/m, €bn)1. 28.7 21.1 35.4
Of which
To households 19.3 22.3 25.2
To nonfinancial corporates 22.8 -5.5 1.7
1. Loans to nonbank private sector, adjusted for securitization
Review of past week’s data

Output and surveys
Consumer confidence (prelim)
Oct Nov Dec
Euro area (European Commission survey)
% balance of responses
Consumer confidence -15.5 -17.6 -16.0 -13.9
National business surveys

2000=100, sa Oct Nov Dec
Italy (ISAE survey)
Producer confidence 94.7 95.2 90.2 90.9 95.9
Real GDP
1Q20 2Q20 3Q20
Spain
%q/q, sa -5.2 -17.8 -17.9 16.7 16.4
%q/q, saar -19.4 -54.3 -54.5 85.5 83.6
%oya -4.2 -21.5 -21.6 -8.7 -9.0
GDP components (%q/q saar)
Private consumption -24.1 -59.1 -59.7 108.9 109.4
Government consumption 5.2 1.4 1.3 4.4 4.8
Fixed capital formation -18.0 -63.1 -60.3 106.6 119.1
Exports -26.3 -80.4 -80.0 225.5 185.1
Imports -21.3 -75.3 -73.9 171.9 160.4
Inflation
Import prices
Sep Oct Nov
Germany
%m/m, nsa 0.3 0.3 0.5
%oya, nsa -4.3 -3.9 -3.8
Consumer prices
Oct Nov Dec
Spain (flash)
%m/m, nsa 0.5 0.2 0.2
21
JPMorgan Securities Japan Co., Ltd. Economic Research
Ayako Fujita (81-3) 6736-1172 Japan
ayako.fujita@jpmorgan.com December 31, 2020
Hiroshi Ugai (81-3) 6736-1173
hiroshi.ugai@jpmorgan.com
under control. We expect consumption to remain depressed

Japan during the winter months.
 Inventories fell to near a decade low, implying a bright-
er outlook for production IP moved sideways
 Employment conditions improved in Nov, with a de- Industrial production flattened out in November, disappoint-
mand surge expected during the New Year holidays ing expectations. Production activity had recovered for five
consecutive months through October, leaving the index 4.5%
 However, retail sales dropped in Nov, with people self- below February’s pre-pandemic level, but the pace of recov-
isolating ahead of the tighter restrictions ery moderated in November. We expected some softening in
 The Dec Tokyo CPI report confirmed further deepening production toward the year-end and early next year, with
of deflation global demand weakening owing to the rise in infection cases,
but the easing came earlier than expected.
The November Economic data released in the last two weeks Production of autos was the main drag, falling 4.7%m/m, sa,
have sent mixed messages, reflecting the abrupt changes in
the first monthly decline since May. On the other hand, output
the government’s infection-control measures. While IP moved
of production machinery and business machinery continued to
sideways in November, labor market conditions improved
recover, rising 6.5% and 4.8%, respectively. Auto production,
strikingly with a 0.2%-pt fall in the unemployment rate. The
which led the overall industrial recovery since the summer,
rise in employment, we believe, largely was attributable to an
decreased in response to rising uncertainty about global de-
expected surge in services consumption during the New Year
mand, but the production recovery appears to have broadened
holidays, but those expectations have been disappointed by a
across industries. Inventories fell a further 1.1% to the lowest
growing number of cancelations after the government’s deci-
level since April 2011, bringing the inventory-to-shipment
sion to temporarily suspend the travel subsidy program.
ratio down to 111.9, back to the late-2019 level (Figure 2).
Meanwhile, retail sales started to weaken ahead of the gov-
ernment’s policy announcement, with sales falling 2.0%m/m, Figure 2: Inventories and inventory to shipment ratio
sa in November. The weakening in retail sales weighed on 2015=100, sa
goods prices, and the December Tokyo CPI indicated a fur- 150
ther deepening in deflation.
140
Ratio
130
Figure 1: COVID-19 new cases and mobility
Persons, smoothed Index, Jan 13, 2020=100, 7-day ma, reversed scale 120
3500 40 110
COVID-19 Transit
3000 new cases 60 100
Level
2500 Walking 90
80
2000 2013 2014 2015 2016 2017 2018 2019 2020 2021
100 Source: METI, J.P. Morgan
1500
120
1000
500 140 Manufacturers’ projections look for a 1.1% drop in produc-
tion in December, followed by a strong 7.1% bounce in Janu-
0 160
Feb 1, 20 Apr 1, 20 May 31, 20 Jul 30, 20 Sep 28, 20 Nov 27, 20 ary. METI’s estimate, a more reliable projection adjusting for
Source: Apple, Our World in Data, J.P. Morgan the statistical bias in manufacturers’ projections, is for a 2.3%
fall in December. With inventories falling to almost a decade
Indeed, the number of new infection cases has been rising low and the outlook becoming brighter with the rollout of
since November, and signs of stabilization have yet to be seen vaccines, firms appear to be increasingly confident about ex-
(Figure 1). Mobility, which had increased until mid- panding production after the winter. We now expect IP to
November, fell sharply in late November and stayed around surge 30%q/q, saar in 4Q, followed by a 17.0% gain in 1Q21.
the levels seen during the summer in recent weeks. People
appear to have started self-isolating ahead of the govern-
Retail sales dropped, and U-rate declined
ment’s decision to suspend the subsidy program, reflecting
persistent fear of infections. Although the government plans Retail sales fell 2.0%m/m, sa, in November, disappointing the
to resume the subsidy program after the scheduled suspension consensus and our expectations (Figure 3). We expected a
from December 28 to January 11, we think this plan faces 1.0% drop, but the actual decline left the index slightly below
challenges as there are no signs of infections being brought February’s pre-pandemic level. All goods categories reported
22
JPMorgan Securities Japan Co., Economic Research
Ltd. Global Data Watch
Ayako Fujita (81-3) 6736-1172 December 31, 2020
ayako.fujita@jpmorgan.com
Hiroshi Ugai (81-3) 6736-1173
declines except for electronics and appliance sales, which restrictions on services were also imposed in some prefec-
jumped 7.2%. The sales pullbacks appear to be attributable to tures. We think the improvement in labor market conditions is
the persistent rise in COVID-19 infection cases since Novem- temporary, and we expect the unemployment rate to rise again
ber as many retail stores reported a decline in shoppers. The in coming months.
rise in infection cases poses downside risks, particularly to
services consumption, but we expect goods consumption also Goods prices are falling
to be curtailed, with the index staying around the current low
level in the coming months. We expect the December con- The deflation trend has started to intensify again. In the De-
sumer sentiment index due next week to fall 2.7pts to 31.0. cember Tokyo CPI report, the BoJ’s preferred core CPI (ex.
fresh food & energy) dropped 0.4%oya after declining 0.2%
Figure 3: Retail sales and consumer sentiment in November (Figure 5). Excluding the impact of the govern-
Index, 2015=100, sa DI, sa ment subsidy program for travel expenses, core CPI inflation
110
Retail sales Consumer sentiment 50 would be 0.1% or zero. While we expect a temporary CPI
45 jump in January reflecting the temporary suspension of the
105
travel subsidy program, the overall trend weakening in infla-
40
100 tion was in line with our expectations.
35
95
30 Goods prices fell further in December, reflecting the incom-
90 25 plete recovery in consumption relative to pre-pandemic pro-
85 20
jections (Figure 5). Prices for clothes declined 0.5%oya, after
2013 2014 2015 2016 2017 2018 2019 2020 2021 a 1.1% jump in November, and food prices inflation (ex. fresh
Source: METI, Cabinet Office, J.P. Morgan food) declined further to -0.2%oya from -0.1%. Mobile phone
charges plunged -4.5%oya, from 0.3% in November, and even
Figure 4: Unemployment rate and job-offers-to-applicants ratio durable goods prices (ex. mobile phones), which had been
% of labor force, sa Ratio, sa strong in recent months, decelerated to 1.5%oya from 2.2%.
4.5 U-rate 1.7 On the other hand, services price inflation remained broadly
stable. While we expect a temporary rise in accommodation
4.0
Existing job-offers- fees in the January CPI, reflecting the temporary suspension
1.4
3.5 to-applicants ratio of the government subsidy program, the deflation in accom-
3.0
modation fees was almost unchanged in December, at around
1.1 34%oya. The prices of dining out and transportation fell fur-
2.5 ther, offset by housing rent, which continued to rise on trend.
2.0 0.8
Figure 5: Core CPI excl. fresh food and energy (Tokyo)
2013 2014 2015 2016 2017 2018 2019 2020 2021
Source: Statistics Bureau, MHLW %oya contribution, incl, the impact of the VAT hike
1.5 Goods
On the other hand, the unemployment rate surprisingly fell Services
0.2%-pt to 2.9%, sa in November (Figure 4). The number of 1.0 Public services
unemployed dropped by 7.5%, after four consecutive monthly 0.5 Core CPI
increases, while the number of employed rose 0.6%. The la-
bor force grew 0.4%, with a notable jump in the female labor 0.0
participation rate to close to the decade’s high reached in De- -0.5
cember 2019. The improvement in labor market conditions
-1.0
may have been attributable to an expected rise in services
2016 2017 2018 2019 2020
activity during the New Year holidays, with a 0.02pt rise in Source: Statistics Bureau, J.P. Morgan
the job-offers-to-applicant ratio. Indeed, until mid-December,
many accommodation establishments indicated that rooms
were fully booked for the New Year holidays, supported by
the government’s subsidy program. However, after the gov-
ernment’s decision to temporarily suspend the program for
two weeks from December 28 to January 11 to contain infec-
tion cases, an increasing number of people canceled travel
plans to stay home during the holidays. In addition to the
temporary suspension of the travel subsidy, renewed business
23
JPMorgan Securities Japan Co., Economic Research
Ltd. Japan
ayako.fujita@jpmorgan.com
Hiroshi Ugai (81-3) 6736-1173
Data releases and forecasts Unemployment rate (% sa) 3.0 3.1 3.1 2.9
Job offers ratio (% sa) 1.03 1.04 1.03 1.06
Weeks of January 4 – 8
See the main essay.
Wed Consumer sentiment

Tokyo Consumer prices (Dec 25)
Jan 6 DI, sa
%oya, 2015-based
2:00pm Sep Oct Nov Dec
Oct Nov Dec
Consumer sentiment 29.3 32.7 33.7 31.0
Overall -0.3 -0.8 -1.3
Standard of living 31.4 35.1 36.7
ex. cons. tax hike and free edu. -0.4 -0.8 -1.3
Income growth 32.7 34.8 35.7
Core (ex fresh food) -0.5 -0.7 -0.8 -0.9
Labor market conditions 21.2 26.0 26.5
Durable goods purchases 32.0 34.9 34.7
Ex fresh food and energy -0.2 -0.2 -0.3 -0.4
1. The DI asks whether a respondent thinks that now is a good time to purchase durables
We expect consumer sentiment to fall 2.7pt to 31.0 in De-
See the main essay.
cember. With the recent surge in infection cases, the gov-
ernment decided to temporarily suspend the travel subsidy
program during the New Year holidays and strongly re- Commercial sales (Dec 25)
quested people to avoid social gatherings. We expect this %m/m, sa
to dampen the recent recovery in consumer sentiment. Sep Oct Nov
Total retail sales -0.1 0.5 -1.0 -2.0
%oya -8.8 6.3 1.7 0.7
Thu Employers’ survey – preliminary
Jan 7 %oya See the main essay.
8:30am Aug Sep Oct Nov
Official base Housing starts (Dec 25)
Monthly wages per employee -1.3 -0.9 -0.8 -0.7 Sep Oct Nov
Scheduled payments -0.3 0.1 0.3 Housing units %oya -9.9 -8.3 -3.2 -3.7
%m/m, sa -0.5 -1.6 1.0 2.3
Full-timers monthly -0.7 -0.4 -0.2
Mn units saar 0.81 0.80 0.82
Par-timers hourly 3.6 3.2 2.0
Floor space, 6mma* (%m/m, sa) -1.8 -0.6 0.8
Overtime payments -13.5 -12.3 -11.7
November housing starts by unit started to pick up to 2.3%, af-
Special payments -0.6 -8.5 -7.2
ter three consecutive monthly declines. That said, the timing of
Real wages (total) -1.4 -1.1 -0.2 the rebound was later than expected, with the housing starts of
Total hours worked -5.1 -1.7 0.2 3mma staying flat. In details, although built for sale continued
Constant samples base to decline (-6.0%), both owner occupied (7.8%) and built for
Monthly wages per employee -1.6 -1.2 -0.9 rent increased (5.3%). The six-month moving average of hous-
We project total earnings per employee to fall 0.7%oya in ing starts by floor space, a better indicator of real GDP residen-
November, modestly narrowing the pace of decline from a tial investment, also started to pick up to 0.8% in November.
0.8% decline in October. Services activity picked up That said, it left the Oct-Nov level of 7.4% annualized below
strongly until mid November, but this should have started the 3Q tally. With this delayed recovery in residential invest-
to lose momentum later in the month with a rise in infec- ment, we revised GDP-based residential investment down
tion cases. With weak prospects for the winter bonus pay- to -5.0%q/q, saar for 4Q and up to +5.0% for 1Q21.
ments and the renewed business restrictions, we expect the
recent trend recovery in wages likely will temporarily halt Industrial production – preliminary (Dec 28)
during the winter months. %m/m, sa
Sep Oct Nov
Production 3.9 4.0 2.5 0.0
Review of past week’s data Shipments 3.9 4.9 -0.9
Services producer prices (Nov 25) Inventories -0.5 -1.8 -1.1
Sep Oct Nov Inventory/shipments ratio -4.4 -3.3 -1.8
%oya 1.4 -0.5 ___ -0.6 See the main essay.
ex. cons. tax hike -0.5 -0.5 -0.5
November SPI (ex. the impact of consumption tax hike) was Source: BoJ, CAO, EJCS, JADA, JCSA, JDSA, JFA, JLM, VMA, Markit, METI, MHLW, MILT,
unchanged at -0.5%oya. That said, advertising fees, which are MoF, Reuters, Statistics Bureau, J.P. Morgan forecast
sensitive to domestic demand, expanded their negative growth,
suggesting high uncertainty about domestic service demand for
the time being.
Labor force survey (Dec 25)

%m/m, sa
Sep Oct Nov
24
Silvana Dimino (1-212) 834-5684 Global Data Watch
silvana.dimino@jpmorgan.com December 31, 2020
Jesse Edgerton (1-212) 834-9543
jesse.edgerton@jpmchase.com
While the renewed measures clearly will exert a drag, we be-

Canada lieve the effect will be less severe than the springtime re-
 Trend of new COVID cases appears to be leveling off… strictions since we expect less disruption to the manufactur-
ing, construction, and energy sectors. Nevertheless, the down-
 …but lockdown measures will stretch into January side risks on economic activity in the early part of 2021 have
 We drop our 1Q21 real GDP growth forecast to -1%,ar intensified. We still project a strong run of growth following
the first quarter on widespread vaccine distribution and con-
 Fourth-quarter growth tracking stronger tinued hefty support from fiscal and monetary authorities.
At the forefront this week is the trajectory of the virus and 4Q real GDP growth forecast revised up to
tightening provincial restrictions intended to contain the 5%
spread. The renewed restrictions present the greatest risk to
Real GDP grew a stronger than expected 0.4%m/m in Octo-
growth in the early part of 2021. On the upside, the trajectory
ber, and growth in November matched October according to
of the virus has leveled off in recent weeks, and the hearten-
Statistics Canada’s preliminary estimate. Manufacturing out-
ing trend is expected to continue as lockdown measures limit
put (overall production including stock-building) was among
economic activity in the largest provinces (Figure 1).
the growth leaders in November, yet Statistics Canada also
Figure 1: New confirmed cases and mobility reported that manufacturing sales declined 0.4% in the month.
7-day average index The conflicting message suggests that an inventory catch-up
7000 10 is boosting manufacturing output supporting our fourth quar-
Google Activity Index
6000 0
ter forecast. We expect a moderate inventory build in the
5000 -10
fourth quarter after two consecutive quarterly runoffs.
4000 -20 Figure 3: Monthly and quarterly real GDP
3000 -30 %ch,q/q, saar Monthly real GDP on a
2000 New cases -40 quarterly basis (tracking
60
1000 -50 estimate)
0 -60 40
Quarterly real GDP
Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Source:Google, JHU, J.P. Morgan 20
0
We expect Ontario’s province-wide lockdown, which began
-20
on Dec. 26, to have the biggest effect on economics activity in
1Q21 (Figure 2). The province is on lockdown for a minimum -40
of 14 days for northern Ontario and 28 days for southern On- 2015 2016 2017 2018 2019 2020 2021
Source:Statistics Canada, J.P. Morgan
tario, including the large urban area of Toronto and the sur-
rounding suburbs. The development challenged our already
weak forecast of zero real GDP growth in 1Q21. We now With solid expansion now confirmed at the start of 4Q20 and
believe that there will be a larger hit to real consumption and growth steady into November, real GDP is tracking stronger
residential investment in the first quarter than we were esti- gains than our 3% forecast, so we raised our growth forecast
mating, so we took our forecast down to -1%q/q, ar. to 5%, ar (Figure 3). We have accounted for the dampening
effect of expanding lockdown measures during December. A
Figure 2: Ontario COVID-19 cases second wave of the virus was already apparent in October, but
average cases last 7 days at the time the strictest measures were imposed in the prov-
2500 ince of Quebec and generally limited to the services sector. In
the other provinces the containment measures largely amount-
2000
ed to stepped-up recommendations on social distancing and
1500 mask wearing. It was only in early December that lockdown
measures expanded to larger areas like the heavily populated
1000
region of southern Ontario and province-wide in Alberta.
500
0
Mar 1, 20 May 16, 20 Jul 31, 20 Oct 15, 20 Dec 31, 20
Source:PHA, J.P. Morgan
25
Silvana Dimino (1-212) 834-5684 Canada
Jesse Edgerton (1-212) 834-9543
jesse.edgerton@jpmchase.com
Data releases and forecasts Building permits

%m/m, sa, unless as noted
Sep Oct Nov
Tue Industrial PPI Total 18.6 18.4 -14.6 -12.6 2.1 12.9
Jan 5 %m/m, nsa, unless noted %oya 22.6 -5.8 -4.4 2.9 22.8
Total 1.1 0.6 -0.4 -0.6
%oya 0.4 1.1 0.7 0.0 Source: Statistics Canada, Ivey Business School, CMHC, Markit, Teranet/National Bank of Cana-
da, CREA, CFIB, Bank of Canada, J.P. Morgan forecasts
Ex energy 1.1 1.2 -0.5 -0.9
%oya 3.4 4.8 4.4 3.5
Thu International trade

Jan 7 Sa
Balance (C$ bn) -3.14 -3.82 -3.76 -3.5
Exports (%m/m) -1.6 1.0 2.2 1.0
Imports (%m/m) 0.3 2.3 1.9 0.5
Real balance -1.13 -1.26 -1.47
Thu Ivey PMI

Jan 7
Composite index¹ (sa) 52.9 52.8 54.0 48.0
Purchasing index (sa) 54.3 54.5 52.7 48.0
1. Calculated and seasonally adjusted by J.P. Morgan
Fri Labor force survey

Jan 8 Sa
Employment (mn) 18.47 18.55 18.62 18.54
(ch, m/m, 000s) 378.2 83.6 62.1 -80.0
(%m/m) 2.1 0.5 0.3 -0.4
(%oya) -3.6 -3.1 -2.5 -3.1
Labor force (mn) 20.30 20.37 20.35 20.31
(%m/m) 0.8 0.3 -0.1 -0.2
(%oya) 0.2 0.4 0.3 0.2
Unemployment rate (%) 9.0 8.9 8.5 8.7
Avg hrly earnings (%oya) 5.4 5.2 4.8 3.4
Hours worked (%m/m) 1.9 0.8 1.2 0.5

New house prices
Nsa
Sep Oct Nov
Total,%m/m 1.2 0.8 0.5 0.6
%oya 3.2 3.9 4.5 4.6
Monthly GDP
sa
Aug Sep Oct
Total,%m/m 0.9 0.8 0.3 0.4
%oya -4.5 -3.9 -3.8 -4.3 -3.5
26
Banco J.P.Morgan, S.A., Institución de Banca Múltiple, Economic Research
J.P.Morgan Grupo Financiero Global Data Watch
Steven Palacio (52 55) 5382-9651 December 31, 2020
steven.palacio@jpmorgan.com
Gabriel Lozano (52-55) 5540-9558
gabriel.lozano@jpmorgan.com
Against this backdrop, we are holding on to our pessimistic

Mexico view on 1Q21 GDP, and actually expect it to contract a bit
 GDP ending year on high note; 4Q now seen at 8.2% ar more than before (-1.4% ar vs. -1%). The revision is opposite
to that of our US team, which is unusual. However, it rests
 Activity restrictions likely to depress 1Q21, however squarely on domestic dynamics on the heels of what is likely
 We now expect GDP at -8.6% and 4% in 2020 and 2021 to be a renewed wave of restrictions on activity. As of now, 5
states of 32 have re-imposed the highest level of restrictions
 Inflation should remain near target by year-end to activity since the economy began to be reopened around
mid-year. And judging by the high rates of hospital utiliza-
Last week’s data reinforced our sense that activity was tion, at least a handful states more should follow suit. It is
stronger than thought in the current quarter. IP had already worth noting that among the five states that reinstated re-
displayed such strength in October, with industrial output strictions—in these states only “essential” activities might be
tracking a 14.5% annualized gain early in the quarter, and undertaken—are the two most populated in the country. This
manufacturing, in particular, up around 14.3% annualized in is largely behind the downward revision to 1Q21 GDP. That
October compared to the 3Q average output level. This has said, we are upgrading our outlook for 2Q onward, and we
been a recurrent theme throughout the recovery, as manufac- now expect average quarterly GDP gains of about 4% ar be-
turing has outperformed our expectations driven primarily by tween then and the end of next year. Together with stronger
external demand. Although this sector accounts for only a 4Q20 growth, this lifts our estimated GDP growth rate for
relatively small share of the economy (roughly 16%), it is also 2021 to 4%y/y from 3.5% before (Figure 2).
a big driver of services tightly linked to external demand. We
have thus seen its share of services recovering much faster Figure 2: Real GDP forecasts
than their domestically-driven counterparts. It is therefore no %3m/3m saar Previous
surprise that a rapid recovery in factory output is helping buoy 16 12.8 New
the overall economy (Figure 1). 12 8.2
8 4.0 3.5 4.5 4.5
4.0 3.5 4.0
Figure 1: GDP proxy and manufacturing 4 2.0
%3m/3m saar 0
Manufacturing
200 -4 -1.0 -1.4
150 -8
100 -12 -8.7 -8.6
GDP proxy
4Q20 1Q21 2Q21 3Q21 4Q21 2020 2021
50
Source: J.P. Morgan. 2020 and 2021 are %y/y.
0
-50
Inflation to end year near target
-100
Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Oct-20 CPI inflation has decelerated in line with our expectations,
Source: INEGI.
though the timing was sooner than we thought. Having been
close to 4%oya throughout a good part of the second half of
the year, inflation dropped below 3.5% in November, and is
The GDP proxy for October released last week reinforced
likely to dip a bit further by year-end. We expect consumer
these trends. The proxy pointed to GDP growing 1.6%m/m in
prices to increase 0.43%m/m in December, bringing the annu-
October, nearly matching our expectations—in fact marginal-
al inflation rate down a tick to 3.2%oya (Figure 3). Core infla-
ly outpacing them. The composition was a bit less upbeat,
tion likely edged higher to 3.81%oya, but remained below the
with services again lagging the recovery in the industrial sec-
4%oya seen prior to strong discounts in November. There was
tors. At any rate, the outcome was consistent with GDP track-
a sharp reversal of the discounts seen in November in the first
ing a massive 12% ar gain in 4Q, considerably stronger than
half of December, but we continue to think that a more per-
our earlier forecast of 6.4%. As a result, we upgraded our 4Q
manent underlying disinflation trend is taking hold. This is
GDP forecast to 8.2% ar. We are still concerned about the most evident in core services inflation, which is likely to have
economic outlook going forward, as long-term damage from ended the year near 2%oya. In our view, this reflects not only
the crisis seems likely. Furthermore, in the very short-term, lingering restrictions to activity, and demand relocation from
the resurgence of the COVID-19 spread locally should weigh goods to services, but also more broadly declines in house-
down activity early next year, even a bit earlier. hold and firms' income that are likely to remain drags on
firms' pricing power. In fact, we think that upside risks to in-
27
Banco J.P.Morgan, S.A., Institución de Banca Múltiple, Economic Research
J.P.Morgan Grupo Financiero Mexico
Gabriel Lozano (52-55) 5540-9558
gabriel.lozano@jpmorgan.com
flation associated to renewed lockdowns and the entailing Review of past week’s data
potential supply disruptions should be outweighed by the
more-lasting downward pull from depressed private sector Retail sales
budgets. Aug Sep Oct
%oya -10.8 -7.1 -5.2 -7.1
%m/m sa 2.7 2.7 0.5 -1.4
Figure 3: Headline CPI
%oya, monthly Economic activity index (IGAE)
8 %oya, unless noted
7 Aug Sep Oct
6 %oya -9.2 -5.4 -4.0 -5.3
5 %m/m sa 1.4 1.2 1.5 1.6
4
3
Consumer prices
2 Nov 1H Nov 2H Dec 1H
1 %2w/2w 0.04 -0.10 0.25 0.34
0 Core -0.11 -0.20 0.41 0.52
12 13 14 15 16 17 18 19 20 %oya 3.43 3.23 3.13 3.22
Source: INEGI and J.P. Morgan forecast for Dec-20 boxed. Core 3.68 3.64 3.69 3.81
Trade balance
Against this backdrop, we continue to think that inflation Sep Oct Nov
should remain low next year, notwithstanding a base-effect- Balance (US$ mn) 4.4 6.2 4.1 3.0
driven spike in Apr/May. In turn, this should suffice for Exports (US$ bn) 38.5 41.9 40.3 38.3
Banxico to resume its easing cycle in February and bring its %oya 3.7 2.9 7.5 2.3
policy rate to 3.5% by May. Imports (US$ bn) 34.2 35.7 36.1 35.3
%oya -8.5 -13.8 -1.5 -3.9
Data releases and forecasts Source: INEGI, IMEF, Banxico and J.P. Morgan forecasts.
Mon IMEF PMI survey

Jan 4 Index, sa
Manufacturing 46.7 49.6 48.5
Non-manufacturing 48.9 48.0 49.5
Mon Remittances
Jan 4 Aug Sep Oct Nov
7:00am Total (US$ bn) 3.6 3.6 3.6
%oya 5.3 15.1 14.1
Thu Consumer prices

Jan 7 Nov 1H Nov 2H Dec 1H Dec 2H
7:00am %2w/2w 0.04 -0.10 0.34
Core -0.11 -0.20 0.52
%oya 3.43 3.23 3.22
Core 3.68 3.64 3.81
Sep Oct Nov Dec
All items (%m/m) 0.23 0.61 0.07
%oya 4.01 4.09 3.33
Core (%m/m) 0.32 0.24 -0.08
%oya 3.99 3.98 3.66
Fri Consumer confidence, INEGI

Jan 8 Index
Composite, sa 36.3 37.9 37.1
28
Banco J.P. Morgan S.A. Economic Research
Cassiana Fernandez (55-11) 4950-3369 Vinicius Moreira (1-212) 834-4144 Global Data Watch
cassiana.fernandez@jpmorgan.com vinicius.moreira@jpmorgan.com December 31, 2020
Cristiano Souza (55-11) 4950-3913
cristiano.souza@jpmorgan.com
Core IPCA-15 stabilized in December, de-

Brazil spite the still-elevated headline
 COVID-19 cases rose further this month, except around
IPCA-15 inflation came in at a high 1.06%m/m in December,
Christmas, probably due to underreporting
not as elevated as the 1.17% consensus forecast but close to
 But mobility continued to increase as we approached our call for a 1.09% rise. The core IPCA-15 rose 0.41%m/m,
the year-end festivities; vaccination should be delayed below our expectation of a 0.51% increase. With that, annual
relative to other countries headline and core IPCA-15 inflation stabilized at 4.2%oya
and 2.6%oya, respectively. While the headline inflation rate
 Sequential inflation should ease at the beginning of 2021 reflects significant base effects, we believe core inflation sta-
as food shock fades bilizing well below the target signals the lack of consistent
 Unemployment rate stabilized in October and credit inflationary pressures at the current stage of the economic
continued growing through November recovery.
We have been arguing for a while now that the effects of

As COVID-19 cases have been rising since the beginning of
many of the 2020 shocks, particularly to food prices, would
November—with a recent daily decline close to the Christmas
start fading at the beginning of next year as wholesale prices
holiday probably due to underreporting—a few states are al-
were set to start falling. Given the downward surprise on food
ready imposing more restrictions. For example, the state of São
IPCA-15 and the recent declines in high-frequency price sur-
Paulo announced that only essential services would be allowed
veys of wholesale agricultural prices, we are becoming in-
to open around the holidays, and the state of Amazonas closed
creasingly comfortable with that call. In addition, the recent
non-essential services for 15 days. Even so, the restrictions
increase in rainfall should help cap electricity prices. We look
have not affected mobility, which continued increasing as we
for the IPCA-15 to increase 0.16%m/m in January, followed
approached the end-of-year festivities (Figure 1).
by 0.24% and 0.12% rises in February and March, respective-
Figure 1: Mobility and new COVID-19 cases per million ly (Figure 2).
7-day average, % vs. baseline new cases per million
Figure 2: Short-term inflation forecasts
10 Google 250
%m/m
0 Activity Index
200 1.4 1.18
-10 1.2
150
-20 1.0
100 0.8
-30 0.57 0.54
New cases 0.6
50 0.34 0.36
-40 per million 0.4 0.24 0.22 0.17 0.27
0.16 0.12 0.11 0.15
-50 0 0.2
Mar 1, 20 May 30, 20 Aug 28, 20 Nov 26, 20 Feb 24, 21 0.0
Source: Google, Ministry of Health and J.P. Morgan Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
20 21 21 21 21 21 21 21 21 21 21 21 21
Source: J.P. Morgan forecasts
In the meantime, the local media have been reporting that
vaccination in Brazil will be delayed. It appears that Pfizer Unemployment rate stabilized in October,
will not ask the Brazilian Health Agency (Anvisa) for an
with other positive signals
emergency approval of the first widely used vaccine (“Pfizer
não vai submeter pedido para uso emergencial de sua vacina In October, the unemployment rate was of 14.3%, 0.2%-pt
no Brasil,” Estadão, December 29, 2020) and the release of below our forecast and 0.40%-pt below the consensus. The
Coronavac results was delayed (“Instituto Butantan anuncia seasonally adjusted jobless rate stabilized at 14.5%, after ris-
que CoronaVac é eficaz, mas adia divulgação de resultados,” ing for eight months from around 11.5% at the beginning of
Globo, December 23, 2020). the year. The participation rate is starting to recover, but it
remains low, which helps to keep the official unemployment
In our view, the steady rise of mobility in December poses rate contained. The monthly proxy that removes the 3-month
upside risk to our 4Q GDP forecast. However, at the same averaging effect shows a decline in the unemployment rate
time the risks on the timing of vaccination may delay the eco- from October (Figure 3).
nomic recovery.
Employment grew almost 2%m/m sa, the second month of
expansion in a row. This recovery is in line with the rebound
29
Banco J.P. Morgan S.A. Economic Research
Cassiana Fernandez (55-11) 4950-3369 Vinicius Moreira (1-212) 834-4144 Brazil
cassiana.fernandez@jpmorgan.com vinicius.moreira@jpmorgan.com December 31, 2020
Cristiano Souza (55-11) 4950-3913
cristiano.souza@jpmorgan.com
in the formal jobs payroll (CAGED), which showed that the outstanding credit continued to drive broader measures of
recovery continued through November. credit, while private bond issuance slowed further.
Figure 3: Unemployment rate - original and monthly proxy Loan rates inched up 0.1%-pt in November, but contrary to
%, sa the rise in October, the main driver last month was a slightly
Monthly proxy*
17.0 higher funding rate. Still, loan rates for households and corpo-
15.0 rate lines remain close to all-time lows. Delinquency rates
13.0 remained in a downward trend in November, with credit in
11.0 arrears still indicating that delinquencies may remain low. On
9.0
a less positive note, both indebtedness and income commit-
Original series ment kept growing in September.
7.0 (3mma)
5.0
12 14 16 18 20
Source: IBGE, BCB and J.P. Morgan *Based on BCB study in 2Q20 Inflation report
Data releases and forecasts
- "Estimativa para dados “mensalizados” da PNAD Contínua" Week of January 4 – 8
Fri Wholesale prices (IGP-DI)
Resilient tax revenues led us to revise our Jan 8 Sep Oct Nov Dec
fiscal forecasts 6:00am %m/m 3.30 3.68 2.64 0.76
%oya 18.44 22.12 24.28 23.09
The consolidated government’s (central, regional, and state-
owned companies) primary balance registered a BR18.1bn
deficit in November, reflecting a low deficit for the central Fri Industrial production
government, which in turn was contained by relatively resili- Jan 8 Aug Sep Oct Nov
ent tax revenues. Despite the deficit, gross debt fell to 88.1% 7:00am %m/m sa 3.20 2.60 1.13 0.5
of GDP from 88.8% due to a significant reduction in repo %oya nsa -2.70 3.40 3.40 1.5
operations. Of note, this report incorporated the revised 2018
GDP level and reduced the debt ratios, with gross debt in Oc-
tober falling by 1.9%-pt of GDP. Review of past week’s data
Consumer prices (IPCA-15)
The surprises on tax revenues and some containment in dis- Oct Nov Dec
cretionary expenditure led us to reduce our forecasted primary %m/m 0.94 0.81 1.09 1.06
deficit for the central government this year to BRL780bn %oya 3.52 4.22 4.26 4.23
from BRL823bn previously, which should leave the 2020
deficit of the consolidated government at 9.8% of GDP and
gross debt at end-2020 at 89.1% of GDP (Table 1). National unemployment rate
Aug Sep Oct
Table 1: Fiscal accounts forecasts Rate, 3-month average (nsa) 14.4 14.6 14.5 14.3
Percentage of GDP, except where indicated
New Old
2020 2021 2020 2021 Wholesale prices (IGP-M)
Central government primary balance (BRLbn) -780 -254 -823 -254 Oct Nov Dec
Consolidated government primary balance -9.8 -3.1 -10.4 -3.1 %m/m 3.23 3.28 1.37 0.96
Nominal balance -14.0 -6.7 -15.1 -7.2 %oya 20.93 24.52 23.64 23.14
Gross debt 89.1 89.7 90.7 90.4
Source: J.P. Morgan
Fiscal sector
Minus denotes surplus
Credit market still healthy in November Sep Oct Nov
Primary, BRL bn, 64.6 -3.0 55.9 18.1
The November credit report marked a solid expansion of cred-
12-month sum, as % of GDP
it as the measures to support the market remained in place. Primary 8.9 8.9 9.7 8.9
Outstanding credit grew 1.4%m/m, sa (our seasonal adjust- Nominal 13.5 13.7 14.0 13.1
ment), slightly less than in October (1.6%) but still at a Net debt, % of GDP 60.2 59.9 61.8 61.4
healthy pace. Corporate credit rose 1.3%m/m, sa, or 1.7%
excluding BNDES lines, mainly supported by loans to SMEs, Source: BCB, FGV, IBGE, and J.P. Morgan forecasts
while credit to households increased 1.4%. This growth in
30
J.P. Morgan Securities LLC Economic Research
Diego W. Pereira (1-212) 834-4321 Global Data Watch
diego.w.pereira@jpmorgan.com December 31, 2020
Lucila Barbeito (54-11) 4348-7229
lucila.barbeito@jpmorgan.com
the monetary overhang. In fact, we expect the BCRA mone-

Argentina tary liabilities, encompassing both the money base and inter-
 The FX gap narrowed in December and the BCRA was est-bearing liabilities (Leliqs and repos), to climb to about
able to purchase USD in the spot market 19.8% of GDP, a level not observed since before the sudden
stop of capital inflows in April 2018.
 But the seasonal spike in peso demand explained in part
the relatively well-behaved local market The question is thus on the factors prevent greater stress in the
 We revise down current account surplus forecasts on market, given the current money supply dynamics. The main
lower trade surplus factor to weigh in is the seasonal increase in money demand,
typical of December and June. As illustrated in Figure 2, the
M2 monetary aggregate peaks in June and, most relevant, in
Local markets have been relatively calm in Argentina in De-
December. In the past four years M2 as a share of GDP in-
cember, despite the recent acceleration of inflation. In particu-
creased by 2.2% of GDP on average in December. This year,
lar, the combination of debt management operations and in-
given the particularities of money demand in the pandemic,
tervention in the parallel FX market has driven the official-
we could see even stronger precautionary savings and cash
parallel FX gap narrower, to 68% from 86% a month ago.
preference. The risk of a second COVID-19 wave is starting
This has allowed the BCRA to purchase close to US$500mn
to attract public attention, which may strengthen precaution-
over the month to date in the spot market, reversing part of
ary savings.
the US$1.4bn net USD sales in October-November period
despite the renewed acceleration of direct central bank fund- Figure 2: M2
ing to the Treasury, which increased deficit monetization % of GDP
above 7% of GDP in the last 12 months. Below we discuss a 19.0 Sudden Stop Capital
FX market controls
technicality that helps to explain the puzzle: the seasonal in- 18.0
liberalization
crease in peso demand. 17.0
16.0
Peso-printing machines working extra 15.0
hours in December 14.0
13.0
After a breather in October, the direct central bank financing 12.0
of the Treasury gained momentum in November and peaked 11.0
in December. Of note, through December 18, the monthly 10.0
Oct-15 Oct-17 Oct-19
transfers have totaled ARS255bn, reaching the available room
Source: BCRA
under profit transfers for the year. The direct monetization of
the fiscal deficit is thus poised to close the year at 7.4% of
But even incorporating expectations of a second COVID-19
GDP, as compared to projected headline fiscal deficit of 8.7%
wave, money demand seasonality should dominate from mid-
of GDP in 2020 (Figure 1).
January onward. That could drive renewed pressure on the FX
Figure 1: Fiscal monetization gap, absent policy changes or a credibility shock such as an
% of GDP
Capital
earlier-than-expected agreement and program with the IMF.
9.0 FX market Sudden Stop controls
8.0 liberalization Revising down current account forecasts
7.0
6.0 The trade surplus narrowed further in November, printing at
5.0 just US$271mn, the lowest since August 2018, pushing the
4.0
3.0 YTD surplus to US$12.5bn. The monthly surplus is well be-
2.0 low US$0.9bn average of the prior 3 months and the
1.0 US$2.2bn for November 2019. As we have emphasized in
0.0
-1.0
prior notes, the ill-designed capital control amid a persistently
Oct-15 Oct-17 Oct-19 wide official-parallel FX gap have incentivized economic
Source: BCRA
agents to rush imports and delay exports, as has been evident
since August.
The BCRA, averse to offer positive real rates amid the in-
crease of its monetary liabilities, continues to resort to quanti- Despite this year’s plunge in economic activity, import vol-
tative restrictions that have opened a sustained gap between umes continue to surge, increasing by 24.9%oya in November
the parallel and the official exchange rates, which we called after falling 12.3% in 3Q20, the largest jump reported since
31
J.P. Morgan Securities LLC Economic Research
Diego W. Pereira (1-212) 834-4321 Argentina
diego.w.pereira@jpmorgan.com December 31, 2020
Lucila Barbeito (54-11) 4348-7229
lucila.barbeito@jpmorgan.com
the peak in economic activity in 1Q18, despite economic ac- Table 1: Current account
tivity being down by 7.4%oya as of October (Figure 3). The US$, billion
increase was broad-based, with imports of capital goods, in- 2018 2019 2020(f) 2021(f) 2022(f)
Current Account -27.0 -4.0 4.9 6.3 2.8
termediate goods, and cars up by 39.0%, 30.2%, and
% of GDP -5.2 -0.9 1.4 1.7 0.8
63.5%oya, respectively.
Goods -0.7 18.2 14.9 12.0 10.3
Services -9.0 -5.2 -2.3 -3.0 -3.6
Figure 3: Exports & imports volumes
Income -18.6 -17.8 -9.0 -4.0 -5.0
%oya Exports Current Transfers 1.3 0.8 1.3 1.3 1.1
30 Source: INDEC
20
10
0 Data releases and forecasts
-10 Week of January 4-8
-20 Government tax revenue
-30 Mon Sep Oct Nov Dec
Imports
-40 Jan 4 %oya, real 5.4 5.0 0.5 2.4
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: INDEC
Industrial production
Thu Aug Sep Oct Nov
Jan 7 %oya -7.0 -3.7 -2.9
Exports volume fell 28.6%oya, the declined accelerating from
the 16.0%oya, 3mma contraction in October. A record-
breaking 56.6%oya plunge in primary goods exports led the Construction
Thu Aug Sep Oct Nov
export volumes contraction. However, this steep fall partly
Jan 7 %oya -17.6 -3.8 -0.9
reflects base effects as exports increased surged 46.2%oya in
November 2019, as exporters advanced sales ahead of the
expected increase in export taxes that became effective in
Review of past weeks’ data
December 2019. Budget balance
Sep Oct Nov
After November’s trade balance print and 3Q current account ARSbn 167.2 81.6 100 -58.7
balance release last week, we lowered our current account
projections for 2020-2022. We cut our trade surplus forecast Trade balance
for this year further to US$13bn (FOB-CIF), which translates Sep Oct Nov
into a US$15bn surplus under BoP accounting (FOB-FOB). US$bn 0.6 0.6 1.0 0.3
Moreover, we also raised the 2020 income and services deficit
following the release of the 3Q current account surplus, which
surprised to the downside. The revisions are now consistent Current account
1Q20 2Q20 3Q20
with a current account surplus of US$4.9bn or 1.4% of GDP
US$bn 0.3 2.8 2.7 1.2
in 2020, increasing to US$6.3bn or 1.7% of GDP in 2021,
assuming a stabilization scenario with an IMF deal by
March/April next year (see Table 1). For 2022, we see the Economic activity
current account surplus easing to 0.8% of GDP, assuming Aug Sep Oct
stable REER and a tepid recovery. This would imply trade %oya -11.8 -6.9 -7.2 -7.4
balance surplus narrowing by US$4.6bn in 2020-2022 amid
imports growth on the recovery of domestic activity and a Source: INDEC and J.P. Morgan forecasts
gradual increase in exports. We expect the services deficit to
widen another US$1.3bn as tourism reopens amid widespread
vaccination by 4Q21/1Q22. We flag further downside risk
absent credible policy anchors that could sustainably reduce
the FX gap. Moreover, we have also highlighted the risk of a
dry spell taking a toll on agricultural production (see our re-
cent note for further detail on our 2021 outlook).
32
Allan Monks (44-20) 7134-8309 Global Data Watch
allan.j.monks@jpmorgan.com December 31, 2020
Malcolm Barr (44-20) 7134-8326
malcolm.barr@jpmorgan.com
designing a mechanism for dispute resolution the two sides

United Kingdom could live with. Fishing was about how much the EU’s share
 UK and EU agreed on limited scope trade deal of the permissible catch would fall and over what time frame.
What is remarkable is that while reaching agreement has
 Our forecast had already factored in the impact of a proved difficult, the difficulties have been over issues which,
deal, but rising COVID-19 cases leave downside risks in our view, are not fundamental to the economic impact of
 We expect a national lockdown through January, but the deal. Instead, a number of issues had emerged largely be-
the terms could be tighter than seen in November cause they were seen as leitmotifs of ‘sovereignty’ on the
U.K. side (namely fishing, the level playing field and govern-
ance of the treaty).
COVID-19 infections have continued to surge over the second
half of December, raising the prospect of yet tighter re-
What does not appear to have ever been as contentious is the
strictions. We have already positioned our forecast to antici-
coverage of the deal beyond the avoidance of tariffs and quo-
pate a national lockdown similar to that seen in November
tas on trade in goods. The good news is that a disruptive and
(i.e., involving the closure of non-essential shops), implying
acrimonious “no deal” has been avoided. The bad news for
virtually no growth in 1Q (0.5%q/q, saar). An already low
the U.K., in our view, is that the EU appears to have secured a
level of GDP going into the new year is the main reason we
deal which allows it to retain nearly all of the advantages it
have not projected a second consecutive quarterly GDP de-
derives from its trading relationship with the U.K. while giv-
cline (we look for a 2% annualized drop in 4Q20). We also
ing it the ability to use regulatory structures to cherry pick
assume the rest of the economy—sectors less directly affected
among the sectors where the U.K. had previously enjoyed
by new restrictions—will continue to recover. However, there
advantages in the trading relationship. That applies to the ser-
is a growing risk that restrictions will have to be tightened
vices sector in particular, but to parts of the goods sector too.
more than we have anticipated. For example, this may involve
some school closures and stricter stay-at-home policies which
We have previously calculated that the consequent hit to ser-
limit recreational activity or the imposition of a curfew. This
vices sector activity alone could generate a near 2% loss of
means risks to our 1Q GDP forecast are already to the down-
U.K. GDP relative to the counter-factual of EU membership.
side. The same appears to be true of 4Q GDP as a new ‘Tier
That is purely a level impact coming from regulatory change.
4’ of restrictions (involving shop closures) was brought in just
What we know about the deal thus far would not cause us to
before Christmas for large swaths of country. However, the
revise that estimate while we suspect the agreement will also
release of November GDP (due w/b 11 Jan) is likely to have a
create opportunity for further losses owing to regulatory change
larger bearing on where 4Q GDP prints.
in the goods sector. There are also dynamic impacts on growth
that can come from lower migration flows, and slower produc-
Brexit: At long last, a deal tivity growth from diminished trade intensity and competition
Our forecast had already built in the impact of a limited EU to factor in, although these are difficult to quantify. And while
trade deal, which is expected to result in disruption at the bor- those impacts lie in the future, we and others have previously
der which continues into the new year. On 24 December, offi- assessed that the uncertainty created by Brexit has already
cials finalized the legal text, setting out an agreement on fu- caused weaker GDP growth (primarily via reduced business
ture trading terms. The legislation is not expected to encoun- investment) to the tune of around 2% of GDP.
ter any significant problems in the UK parliament. The deal is
expected to be approved by the European Council which al- As for the potential offsets coming from greater U.K. regula-
lows it to be provisionally applied from January 1. At some tory autonomy, we remain skeptical that current and future
point in the new year the EU Parliament will vote to ratify the administrations have a well-defined and politically deliverable
deal, and member states will also have to follow their own agenda which will turn that into a source of economic ad-
procedures to ratify it. That will mean votes in member state vantage. On the issue of advantages from independence in
parliaments in some cases, with an outside chance of a refer- trade deals, we remain skeptical that the U.K. will be able to
endum on it in a few (Ireland in particular). While this process make significant headway in creating relationships that offset
still has to be completed and could throw up some bumps, it a diminished relationship with the EU. That is at least in part
looks unlikely to meaningfully challenge or change the deal. because even post-Brexit, the U.K. has significant sunk costs
in the EU’s regulatory regime which make it hard to make
We have written several times that all of the contentious is- trade deals with others.
sues were amenable to compromise solutions the two sides
could likely live with if they were minded to, and so it has Data releases and forecasts
proved. The level playing field issue was ultimately about Week of January 4 – 7
33
Allan Monks (44-20) 7134-8309 United Kingdom
allan.j.monks@jpmorgan.com December 31, 2020
Malcolm Barr (44-20) 7134-8326
malcolm.barr@jpmorgan.com
Mon Money supply Permanent placements 56.0 48.8 48.2

Jan 4 Sa Permanent salaries 44.7 44.5 45.6
9:30am Aug Sep Oct Nov Availability of permanent staff 76.7 74.2 71.4
M4 ex IOFCs (%m/m) 0.0 0.5 1.2
M4 ex IOFCs (%3m/3m, ar) 7.4 6.4 6.9
M4 (%m/m) -0.4 0.8 0.6 Review of past week’s data
M4 (%oya) 12.1 12.3 12.9
M4 lending (%m/m)1 -0.5 0.3 -0.2 CBI survey of distributive trades
M4 lending (%oya)1 4.4 4.3 3.8 % balance
1. Excludes the effect of securitization. Oct Nov Dec
Volume of retailer sales -23 -25 -3
Mon Net lending to individuals (BoE release)
Jan 4 £ bn, average Public sector finance
9:30am Aug Sep Oct Nov £ bn, nsa
Consumer credit (ch, m/m) 0.3 -0.6 -0.6 Sep Oct Nov
Mortgage approvals (000s, sa) 85.7 92.1 97.5 PSNCR -33.4 -19.8 -20.0 -23.5
Secured lending (ch, m/m) 3.1 4.9 4.3 PSNB 27.9 26.4 21.6 20.9 30.8
- ex. pub. banks 28.6 27.1 22.3 21.7 40.4 31.6
Mon PMI survey final, manufacturing
Current budget (ex. pub. banks) -20.4 -19.5 -15.1 -14.4 -29.3
Jan 4 % balance, sa
Net debt to GDP (%) 117.2 115.0 116.5114.8 114.9
9:30am Sep Oct Nov Dec - ex. pub. banks 101.2 99.3 100.8 99.2 99.5
Overall index 54.1 53.7 55.6 57.3
Output 59.0 55.8 56.7 55.3 Balance of payment quarterly report
£ bn, sa
Mon BCC quarterly economic survey 1Q20 2Q20 3Q20
Jan 4 Index Goods and services 0.5 -0.6 16.9 16.6 5.1 1.3
12:01am 1Q20 2Q20 3Q20 4Q20 Income -14.9 -11.6 -10.5 -19.5 -11.9
Manufacturing- Deliveries 3 -59 -15 Current transfers -6.4 -9.1 -9.0 -5.2
Manufacturing- Prices 33 12 20 Current balance -20.8 -18.7 -2.8 -11.9 -15.7
Services- Deliveries 16 -64 -25
Services- Prices 28 5 14 Business investment (final)
2000 = 100, sa
Tue New car registrations 1Q20 2Q20 3Q20
Jan 5 %3m/12m nsa
%q/q -0.5 -0.7 -26.5 -25.4 8.8 9.4
9:00am Sep Oct Nov Dec %oya 1.1 0.9 -26.1 -25.2 -20.7 -19.2
Total -0.5 -3.9 -9.4
Private (ex. bus. and fleet) 4.1 -0.9 -7.8 Real GDP (second estimate)
Sa
Wed PMI survey final, services & composite
2Q20 3Q20¹ 3Q20
Jan 6 % balance, sa
Total GDP:
9:30am Sep Oct Nov Dec %q/q, sa -19.8-18.8 15.5 15.5 16.0
Services business activity 56.1 51.4 47.6 49.9 %oya, sa -21.5-20.8 -9.6 -8.6
Composite %q/q, saar -58.7-56.4 78.0 81.1
Output 56.5 52.1 49.0 50.7 Breakdown (%q/q, sa):
New orders 54.7 48.5 48.9 Private consumption -23.6-22.2 18.3 19.5
Employment 42.7 43.4 42.3 Public consumption -14.6-14.5 7.8 10.4
Fixed investment -21.6-22.8 15.1 17.9
Thu PMI survey final, construction Business investment -26.5-25.4 8.8 9.4
Jan 7 % balance, sa Exports -11.0 -8.6 5.1 -0.4
9:30am Sep Oct Nov Dec Imports -22.7-20.8 13.2 11.7
Overall index 56.8 53.1 54.7 Household saving rate (%) 28.1 9.1 16.5
Disposable income (%q/q, saar) -12.6 -4.7 22.7
Fri Halifax house price index 1. First estimate
Jan 8 Sa
8:30am Sep Oct Nov Dec Source: Rightmove, CBI, BBA, BCC, GFK, BRC Markit, SMMT, RICS, Land Registry, ONS, BoE,
%m/m 1.5 0.3 1.1 and J.P. Morgan forecasts
%oya 7.2 7.5 7.6
%3m/3m saar 13.7 16.8 16.2
Fri Markit report on jobs
Jan 8 % balance, sa
34
J.P. Morgan Bank International LLC Economic Research
Anatoliy A Shal (7-495) 937-7321 José Cerveira (44-20) 7742-3556 Global Data Watch
anatoliy.a.shal@jpmorgan.com jose.a.cerveira@jpmorgan.com December 31, 2020
Yarkin Cebeci (44-20) 7134-7547 Nicolaie Alexandru-Chidesciuc (44 20) 7742-2466
yarkin.cebeci@jpmorgan.com nicolaie.alexandru@jpmorgan.com
appreciation goes beyond economic fundamentals the BOI is

Emerging Europe prepared to combat these pressures with FX purchases.
 Israel: No change expected from BOI
Figure 2: Israel inflation
 Turkey: The CBRT’s 200bp hike helps to rebuild credi- %oya
CPI
bility 2.0
1.5 Core
1.0
Israel: BOI to hold rates 0.5
The Bank of Israel should maintain a dovish and cautious tone 0.0
at next week’s rate setting meeting, amid the country’s third -0.5
nationwide lockdown, but we believe it will still hold the pol- -1.0
icy rate steady at 0.1%. After trimming the policy rate by -1.5
15bp in April (Figure 1) we do not anticipate any further rate -2.0
Jan 15 Jan 16 Jan 17 Jan 18 Jan 19 Jan 20
cuts as policy makers are cautious of zero and negative inter- Source: CBS, J.P. Morgan
est rates given the uncertainty surrounding interest-rate trans-
mission, in particular, the concern that saving rather than
spending could actually increase in this scenario. Moreover,
Turkey: The CBRT hikes again
while the third nationwide lockdown implies downside risks Governor Agbal again did not disappoint the markets. After
to 1Q GDP, rapid progress of Israel’s COVID-19 vaccination the 475bp hike in November, the CBRT raised its key policy
effort is encouraging. rate (1-week repo rate) by 200bp to 17.0% last week. The
move was fully in line with our expectations but larger than
Figure 1: Israel policy rate the market consensus of 150bp. With the recent rise in
% COVID cases and the following lockdown, markets expected
0.30 an even smaller hike, so the CBRT decision likely was a sig-
0.25 nificant positive for many people. Also importantly, the
0.20 CBRT maintained its hawkish tone in the interest rate state-
ment, reiterating that “tightness of monetary policy stance
0.15
will be decisively sustained.” We believe that, barring an un-
0.10 expected jump in inflation, the current level of the policy rate
0.05 will be enough to contain price pressures and to restore policy
0.00
credibility. Hence, we do not expect further hikes. We expect
Jan 15 Jan 16 Jan 17 Jan 18 Jan 19 Jan 20 the next move will be a cut, delivered when the CBRT is con-
Source: BOI, J.P. Morgan fident in the credibility build-up. We expect a 100bp cut in
April, but pandemic-related factors create significant uncer-
tainty on the exact timing of the easing cycle.
Still, with a third (albeit less severe) lockdown imposed for at
The interest rate statement was similar to the one last month
least three weeks, the BOI will retain its accommodative stance
with two differences: 1) Last month, the CBRT warned of a
and could expand balance sheet measures in 1H21, including
rise in inflation in the November data, while there was no
QE and cheap lending facilities. Policymakers already stated
such reference to the December data this month. This suggests
that QE will continue through 2021, and, after the total package
that an upside surprise similar to that in November is unlikely.
was scaled up to ILS85bn in October, we think there could be a
2) In the policy guidance sentence, the CBRT stated last
further expansion of some 2% of GDP during the year.
month that tightness of monetary policy would be decisively
sustained “until a permanent fall in inflation is achieved.”
The inflation environment remains weak with both headline
This time the statement says that tightness will be decisively
and core in negative territory (Figure 2). Though we expect to
sustained until “strong indicators point to a permanent fall in
see some recovery of prices this year, inflation will remain
inflation in line with the targets and to price stability.” This,
firmly below the BOI’s 1%-3% target range. With structural
in our view, implies that monetary easing could begin before
appreciation pressure on the shekel weighing on the CPI, the
an actual sustained fall in inflation. The CBRT would still
bank will continue with FX intervention this year. In fact,
want to see certain conditions (such as weakening of demand
policymakers stated recently that the current high level of FX
pressures, a downshift in inflation expectations, the start of
reserves (41.9% of GDP) is not an impediment to continuing
de-dollarization and lira strength or stability) met before eas-
this policy. To the extent that policymakers assess that shekel
35
Anatoliy A Shal (7-495) 937-7321 José Cerveira (44-20) 7742-3556 Emerging Europe
ing. We see the first cut in April, but there is significant un- Production, wda 0.0 -1.0 2.7 __
certainty, especially coming from the pandemic. Production, nsa -2.0 2.2 0.6 __
%m/m swda 6.4 2.3 2.8 __
Data releases and forecasts Source: NBH, National Statistics, Eurostat, J.P. Morgan forecasts
Israel:
Czech Republic: Mon BOI rate decision
Mon PMI Jan 4 %
Jan 4 Index On hold (0.10%). See main text for details.
9:30am Sep Oct Nov Dec Source: BOI, National Statistics, J.P. Morgan forecasts
PMI, Manufacturing 50.7 51.9 53.9 54.2
Wed External trade Poland:

Jan 6 CZK bn Mon PMI
9:00am Aug Sep Oct Nov Jan 4 Index
Trade balance 9.0 35.4 33.4 __ 9:00am Sep Oct Nov Dec
Ytd 73.3 108.7 142.1 __ PMI, Manufacturing 50.8 50.8 50.8 51.1
Ytd a year ago 113 133 142 153.9
Exports %oya -6 2 6 __ Thu Consumer prices, preliminary
Imports %oya -6 -3 -2 __ Jan 7 %oya, unless otherwise stated
Fri Real GDP, final All items 3.2 3.1 3.0 2.5
Jan 8 %oya unless otherwise stated %m/m, nsa 0.2 0.1 0.1 0.3
9:00am 4Q19 1Q20 2Q20 3Q20
Source: NBP, National Statistics, Eurostat, Markit, J.P. Morgan forecasts
Real GDP, swda 2.0 -1.9 -10.7 -5.0
%q/q saar 1.7 -12.6 -29.9 30.7
Private consumption 2.8 0.0 -8.1 -3.9 Turkey:
GFCF 4.0 -3.8 -4.9 -11.4
Mon Consumer prices
Jan 4 % change
Fri Industrial output
Jan 8 %oya
Consumer prices
%oya 11.7 11.9 14.0 14.1
Production, nsa -7.3 -2.0 -1.3 __
%m/m 1.0 2.1 2.3 0.9
Production, wda -4.8 -1.9 1.3 __
Producer prices
%m/m sa -0.8 3.6 3.0 __
%oya 14.3 18.2 23.1 24.2
Source: CNB, National Statistics, Eurostat, J.P. Morgan forecasts %m/m 2.6 3.6 4.1 1.7
Core CPI (I)
Hungary: %oya 11.3 11.5 13.3 13.8
%m/m 1.3 1.9 2.1 0.5
Wed Average gross wages Following the strong monetary tightening delivered by the
Jan 6 %oya CBRT and the resulting lira strength, we see inflationary pres-
9:00am Jul Aug Sep Oct sures losing steam. The lagged impact of previous lira weakness
Gross wages, nominal 10.8 9.1 8.8 __ should be the main driver of inflation in December. We expect
Industry 10.2 8.5 9.5 __ price pressures to continue weakening, allowing the CBRT to
Public sector 10.4 7.5 6.5 __ reverse some of the recent tightening in the second quarter of
2021.
Thu Retail trade
Jan 7 % change Source: Turkstat, CBRT, Ministry of Treasury and Finance, J.P. Morgan forecasts
%oya wda -0.7 -2.0 -1.9 __ Review of past fortnight’s data
%m/m swda 1.5 1.3 1.2 __
Hungary:
Thu NBH 1-week deposit facility rate decision Balance of payments
Jan 7 % EUR mn
On hold (0.75%). 1Q20 2Q20 3Q20
Current account balance 288 312 -828 -645 __ 807
Fri Industrial output Trade balance -192 -788 __ -26
Jan 8 %oya Exports %oya 0 -23 __ -1.3
9:00am Aug Sep Oct Nov Imports %oya -1 -21 __ -6.2
36
Anatoliy A Shal (7-495) 937-7321 José Cerveira (44-20) 7742-3556 Global Data Watch
Service balance 1435 1435 650 805 __ 1455 Turkey:

Income balance -566 -540 -455 -426 __ -579
Current transfers -390 -391 -234 -236 __ -43 CBRT rate decision
Fin + cap balance 792 747 -356 -447 __ 1328 %
FDI, net -550 -552 -215 -431 __ -198 Oct Nov Dec
Portfolio investment 2840 2840 -2476 -2492 __ -149 CBRT 1-week repo rate 10.25 15.00 17.00
Other investment 923 880 -2975 -2834 __ -1259 CBRT ON borrowing rate 8.75 13.50 15.50
CBRT ON lending rate 11.75 16.50 18.50
External trade, final CBRT Late liquidity 14.75 19.50 21.50
EUR mn See main text.
Aug Sep Oct
Trade balance 272 1140 896 Capacity utilization
Ytd 2525 3665 4561 %
Ytd a year ago 3050 3527 3906 Oct Nov Dec
Exports, %oya -2.2 6.1 -1.5 Total manufacturing 75.4 75.8 __ 75.6
Imports, %oya -5.3 -0.8 -6.8 Durables 73.6 74.1 __ 73.6
Nondurable 71.8 72.3 __ 71.0
Source: NBH, National Statistics, Eurostat, J.P. Morgan forecasts
Foreign trade
Poland: US$ bn, except as noted
Sep Oct Nov
Retail sales
Trade balance -4.8 -2.3 -4.6
%oya, unless otherwise stated
Exports 15.2 16.4 15.3
Sep Oct Nov
%oya 5.4 5.1 -0.9
Retail sales (nominal) 2.7 -2.1 __ -5.3
Imports 20.0 18.7 19.9
Real, CPI-adjusted 2.5 -2.3 __ -5.3
%oya 21.2 7.2 12.1
%m/m, sa 0.1 -1.0 -2.0 -2.1 __ -0.6
Source: Turkstat, CBRT, Ministry of Treasury and Finance, J.P. Morgan forecasts
Source: NBP, National Statistics, Eurostat, Markit, J.P. Morgan forecasts
Russia:
PMI
Index
Oct Nov Dec
PMI, Manufacturing 46.9 46.3 49.0 49.7
PMI, Services 46.9 48.2 51.0
Real GDP, final

1Q20 2Q20 3Q20
Real GDP 1.6 -8.0 -3.4
%q/q saar -1.6 -29.0 24.0
Balance of payments, final

US$ bn
1Q20 2Q20 3Q20
Current account balance 22.1 -0.5 2.5
Goods balance 33.2 16.3 18.0
Exports %oya -13.0 -30.6 -24.4
Imports %oya 0.8 -12.7 -8.1
Service balance -6.8 -2.3 -3.3
Consumer prices
Oct Nov Dec
%oya 4.0 4.4 4.6
%m/m, nsa 0.4 0.7 0.6
Source: Rosstat, MinFin, AEB Russia, Markit, J.P. Morgan forecasts
37
Yarkin Cebeci (44-20) 7134-7547 MENA
yarkin.cebeci@jpmorgan.com December 31, 2020
Ayomide O Mejabi (44-20) 7134-9399
ayomide.mejabi@jpmorgan.com
SAMA’s international reserves were unchanged in 3Q after a

MENA deep US$26 bn fall in 2Q following a similar-sized contrac-
 Saudi Arabia: Improvement in trade pushed Saudi cur- tion in 1Q (Figure 1). As a reminder, a US$40 bn drop SAMA
rent account balance back to positive territory reserves in 1H20 was related to a transfer to the sovereign
wealth fund (PIF), which invested these funds abroad. Recent
 Egypt: CBE kept policy rates unchanged, while the international reserves data marked a large US$10 bn increase
country reported oya growth in 1Q FY21 in reserves in November, the largest gain since November
2019. Total SAMA reserves now stand at US$456 bn.
Saudi Arabia: Current account balance
moved back into surplus in 3Q Egypt: No change in policy rates
After moving into a US$18.3 bn deficit in 2Q20, the first After cutting key policy rates at the September (-50bp) and
since 2017, the Saudi current account balance marked a November (-50bp) MPC meetings, the CBE kept rates un-
US$2.3 bn surplus in 3Q after the wide deficit of US$-18.3 bn changed in the last MPC meeting of 2020 on 24 December.
in 2Q20. The large move mostly reflected an improvement in The MPC left the deposit rate at 8.25% after easing 400bp
the trade balance with imports contracting slightly in the quar- since the start of the pandemic (Figure 2). The CBE minutes
ter, weighed down by weak economic activity, and exports reported that annual headline inflation jumped to 5.7%oya in
surging 36.5%q/q after plunging more than 41% in 2Q20. Oil November from 4.6% in October following three months of
exports recovered some ground in 3Q, jumping 45% in the acceleration. However, the minutes highlighted that part of
quarter thanks to a pickup in global demand, but remained the pickup was due to “transitory supply shocks” such as
down 40% compared to 3Q19 with total exports 32.5% lower those affecting the prices of food staples including tomatoes.
than a year ago. Moreover, core CPI inflation was mostly flat at 4.0%, and the
CBE’s estimate is for low inflation levels below the 6% infla-
Exports of non-monetary gold and the primary balance con- tion target floor in the coming months. MPC minutes also
tributed positively to the current account. A sharp rise in in- reiterated that policy rates respond to medium-term price ex-
come from equity and investment fund shares increased the pectation rather than current inflation prints.
overall primary income surplus to US$5.6 bn from US$1.2 bn
Figure 2: MENAP monetary policy response
in 2Q. Gold exports reached almost US$1 bn, the highest on
bps key policy rate cut since start of pandemic
records. On the other hand, the secondary balance declined as
expected due to trends in foreign workers remittances with 700
expats transferring money back to home countries while mov- 600
ing back home and those remaining in Saudi Arabia resuming 500
work and he flow of transfers after the lockdown ended. 400
300
The 3Q result poses some upside risk to our current account 200
forecast for 2020. We expect that the deep contraction in 2Q 100
(-12.1% of GDP) will lead to an annual current account deficit 0
PK EY TN JO BH KW AE SA QR MA
of 2.9% of GDP; however, the very weak import figures com- Source: Local central banks
bined with the firming of exports might push the 2020 balance
to a somewhat lower deficit. The inflation target has now been modified with changes to
both the target midpoint and margin between the midpoint
Figure 1: SAMA foreign reserves and the upper and lower bound. The new target has been set at
$bn both scales 7% (down from 9%) with a ±2%-pts margin rather than the
800 MoM change (rhs) FX reserves 20
±3%-pts of the previous target.
10
700
MPC minutes also mentioned the first GDP estimate for the
0 first quarter of the 2021 financial year. Between July and Sep-
600
-10 tember, GDP grew by 0.7%oya following a 1.7% contraction
in the last quarter of FY2020. The CBE expects a gradual
500
-20 recovery with economic activity constrained by new COVID-
400 -30
19 waves and but buoyed by positive news on the rollout of
2013 2014 2015 2016 2017 2018 2019 2020 vaccines, which should ease economic uncertainty in the com-
Source: SAMA, J.P. Morgan
ing quarters.
38
Yarkin Cebeci (44-20) 7134-7547 Global Data Watch
yarkin.cebeci@jpmorgan.com December 31, 2020
Ayomide O Mejabi (44-20) 7134-9399
ayomide.mejabi@jpmorgan.com

Weeks of January 4 - 15
Egypt:
Tue PMI
Jan 5 Index
PMI, Composite 50.4 51.4 50.9 __
Saudi Arabia:
Tue PMI
Jan 5 Index
PMI, Composite 50.7 51.0 54.7 __
Fri Consumer prices

Jan 15 %oya
%oya 5.7 5.8 5.8 5.7
%m/m nsa -0.2 0.1 -0.1 __
Food 12.6 12.9 13.0 __
Housing 0.0 -0.8 -0.8 __
Transport 7.8 7.0 8.0 __

Egypt:
CBE rate decision
%
See main text
SAMA net foreign assets

SAR bn
Aug Sep Oct
1683 1661 __ 1657
Balance of payments
USD bn
Mar Jun Sep
Current account 2.3 -18.2 __ 2.3
YTD 2.3 -16 __ -14
YTD-a year ago 13.1 24.6 __ 31.8
Trade balance 22.5 2.7 __ 15.4
Oil exports 40.0 19.9 __ 28.9
Service balance -9.4 -12.9 __ -8.5
Primary income -1.3 1.2 __ 5.6
Secondary income -9.5 -9.3 __ -10.2
Financial account 0.3 -17.6 __ 1.5
FDI, net -0.8 -1.3 __ 0.6
Portfolio investments 7.4 7.8 __ 0.3
Other investments 19.9 1.9 __ 0.5
Source: CBE, MoPE, GASTAT, SAMA, Markit, J.P. Morgan forecasts
39
J.P. Morgan Securities Australia Limited Economic Research
Ben K Jarman (61-2) 9003-7982 Australia and New Zealand
ben.k.jarman@jpmorgan.com December 31, 2020
Tom Kennedy (61-2) 9003-7981
tom.kennedy@jpmorgan.com
Housing turning up in some pockets

Australia and New Zealand
Residential building approvals have picked up in recent
 Preliminary data suggest Australian retail sales jumped months. We forecast another 2.5%m/m volume gain in next
in November on reopening week’s data for November but still expect somewhat varied
 Housing credit is stabilizing at low levels; building ap- outcomes across market segments.
provals for detached dwellings to pick up further
Anecdotally, housing activity is turning up, and much of the
 Trade tensions with China should be evident in next action is in smaller parts of the market like detached dwelling
week’s export data construction rather than displaying broad rise in the aggre-
gates. Housing turnover is still down in year-on-year terms, as
News flow over the holiday period has been light in the An- are auction sales, whereas catch-up should have been possible
tipodes. A generally positive run of economic readings re- given the market was effectively shut for several months dur-
flecting outcomes over October and November is contrasted ing COVID-19 lockdowns. The last few months have seen
with a rise in the COVID-19 case count in Sydney leading up very strong approvals of new loans, though without much
to Christmas. transmission to credit growth yet as amortization of existing
debt remains a high priority for many households.
Last week’s Australian preliminary retail data showed a fur-
ther pickup in spending through November thanks to Black By far the strongest category of lending is commitments for
Friday promotions and Victoria’s reopening. Next week construction of new dwellings (Figure 1), which are supported
brings the first look at official activity readings. Stabilization by the government’s HomeBuilder program. This is very
in credit data and firmer mortgage financing approvals for positive for detached dwelling building approvals, but higher
new construction in recent months suggest building approvals density projects remain hamstrung by oversupply and a weak
will post another gain, particularly in detached dwellings cur- rental market, structurally declining investor mortgage credit
rently favored by government subsidies. The foreign trade growth, and concerns around building quality over the last
data by contrast will show some damage from geopolitical cycle’s apartment boom.
tensions with China as sanctions in coal and some agricultural
Figure 1: Australian owner occupier mortgage volumes
goods hold back goods exports. There is no data of note due
%oya
in New Zealand. Construction
100 Purchase of of dwelling
new dwelling
Retail sales boosted by Victoria 80
Existing
60
Australian retail sales jumped a remarkable 7%m/m in the
40
ABS’s preliminary data for November, with a disproportion-
20
ate contribution from Victoria. Sales in that state surged over
20%m/m, marking the first full month out of localized 0
COVID restrictions. Excluding Victoria, sales posted a still- -20

solid 2.7%m/m gain, with household goods boosted by Black -40
2015 2016 2017 2018 2019 2020 2021
Friday promotions. Department stores and clothing also had Source: ABS, J.P. Morgan.
positive exposure to the reopening dynamic, as discussed pre-
viously.
Trade frictions start to bite
Heading into the traditional holiday spending and sales peri- The coming week’s trade data for November is likely to show
od, we expect more mixed outcomes. Retail industry reporting the first significant impact of regional trade frictions follow-
suggests a larger than normal share of Christmas spending ing China’s decision to temporarily halt imports of Australian
was completed by early December, and government guidance coal. The preliminary trade data (Figure 2), released a few
to stay at home will have restrained sales in late December. weeks ago, are consistent with this view and show exports to
Victoria’s reopening still has more to add, narrowing the gap China fell 10%m/m. Within this group, nominal coal ship-
in clothing and department store sales there toward national ments plunged 69%m/m, while iron ore fell 7%m/m. As we
levels. But durable goods spending is due payback as services have flagged previously, supply/demand dynamics across the
spending regains its normal share of consumer outlays and coal sector mean China has only limited ability, at least in the
government income support winds down. short term, to satisfy its coal demand via other regional pro-
ducers. The situation is even starker with iron ore; given Aus-
tralia produces 40% of global output, the ability to sidestep
40
J.P. Morgan Securities Australia Limited Economic Research
Ben K Jarman (61-2) 9003-7982 Global Data Watch
ben.k.jarman@jpmorgan.com December 31, 2020
Tom Kennedy (61-2) 9003-7981
tom.kennedy@jpmorgan.com
such supply suggests November’s drop is likely to prove tem-

porary. That said, the impact on exports in the short run is
meaningful, which alongside an ongoing recovery in import
demand is likely to result in the monthly trade surplus narrow-
ing to A$3 billion.
Figure 2: Australian trade balance

A$bn, per month
15
10 Preliminary
Final
5
0
2018 2019 2020 2021
Source: ABS, J.P. Morgan.
Australia
Week of December 4 – 8
Thu Building approvals

11:30am %m/m -12.0 15.4 3.8 2.5
Fri Trade balance

11:30am A$bn 3.8 5.6 7.4 3.0
Review of prior week’s data

No data releases of note.
New Zealand
Week of December 4 – 8
Review of prior week’s data

Source: ABS, Stats NZ, J.P. Morgan forecast

.
41
JPMorgan Chase Bank, N.A., Hong Kong Economic Research
Haibin Zhu (852) 2800-7039 Greater China
haibin.zhu@jpmorgan.com December 31, 2020
Grace Ng (852) 2800-7002
grace.h.ng@jpmorgan.com
measures to boost domestic consumption, promote reform and

Greater China openness, ensure food security, strengthen antitrust rules, de-
 China: Central Economic Work Conference laid out velop the housing rental market, and formulate an action plan
balanced policy objectives for 2021 for capping carbon emission by 2030. For the first time in an
official document, China explicitly said that it will actively
 Industrial profits rose 15.5%oya in November consider joining the Comprehensive and Progressive Trans-
 Hong Kong: November trade activity came in stronger Pacific Partnership (CPTPP).
than expected
In the next few months, the State Council will formulate the
 Taiwan: Export orders surged to a new record high in 2021 government work report (with further details on macro-
November economic policies) and the 14th Five-Year-Plan (FYP) for
 Industrial production rose 0.8%m/m sa in November approval at the National People’s Congress on March 5, 2021.
We expect the government to announce a numeric growth
target for the 14th FYP (5.5%) but to de-emphasize its im-
China: Central Economic Work Conference portance. Meantime, for 2021 the government may continue
laid out balanced policy objectives to omit the annual growth target (as in 2020) given that 2021
China’s top policymakers held the annual Central Economic growth will be severely biased by the low base in 2020, but
Work Conference (CEWC) on December 16-18 and laid out one can derive an implicit nominal GDP growth forecast
key tasks and economic policies for 2021. Overall, the policy based on the details of the budget.
statement reflects balanced policy objectives, to exit from
post-pandemic policy stimulus and to avoid a policy cliff, to Industrial profits rose 15.5%oya in Novem-
balance economic recovery and avoid systemic risk, and to ber
balance near-term and long-term policy goals. The CEWC
Industrial profits continued to register solid growth in China, rising
statement said that macroeconomic policy in 2021 should
15.5%oya in November (vs. 28.2% in October). For the first 11
maintain continuity, stability, and sustainability.
months of the year, profits grew 2.4%oya, up from 0.7% in Jan-
Oct and the 3.3% decline in 2019 (Figure 1). The moderation in
The government will continue to adopt proactive fiscal policy
industrial profit growth in November vs. October largely reflects a
and prudent monetary policy, maintain necessary policy support
less favorable base (industrial profits printed at 422 billion yuan in
for the economic recovery, and make policy operations precisely
October 2019 and 595 billion in November 2019). In absolute
targeted and effective. Policy normalization will occur, but a
terms, November industrial profit (732 billion yuan) was higher
sharp policy turn should be avoided. Proactive fiscal policy will
than the October reading (646 billion yuan). Meanwhile, industrial
be more effective and sustainable. The government will strength-
sales revenue edged up 0.1%oya in the first 11 months (vs. -
en fiscal support for strategically important tasks and focus on
0.6%oya ytd in October). Industrial production costs and fees per
promoting technological innovation, accelerating restructuring, hundred yuan of sales income fell for the first time this year, edg-
and adjusting income distribution as well as addressing hidden ing down 0.01 yuan to 84.08 yuan in Jan-Nov, and industrial en-
local government debt problems. terprises’ profit margin came in at 6.10% in Jan-Nov, compared to
On the monetary policy front, prudent monetary policy should 5.91% in the same period last year. Foreign-owned companies
be flexible, precisely targeted, and reasonable. Money supply continued to lead in profitability while SOEs continued to under-
and total social financing (TSF) growth should be in line with perform.
nominal GDP growth. The policymakers will also deepen
market-based reform of interest rate and exchange rate sys- The growth in November industrial profits is in line with the
tems and maintain RMB exchange rate equilibrium. On the strong recovery momentum reflected in November activity
financial stability front, aggregate debt should be kept stable, data: industrial production growth ticked up to 7.0%oya, ex-
bank capital should be replenished through multiple channels, ports growth jumped to 21.1%oya, FAI growth stayed solid at
and the bond market legal system will be improved. Overall, 9.7%oya, and the recovery further expanded to consumption
the qualitative description of macroeconomic policies was and service activities. Meantime, PPI deflation eased from
broadly in line with expectations. -2.1%oya in October to -1.5%oya in November, mainly due to
sequential increases in producer goods prices. We revised up
The CEWC also laid out eight priority tasks for 2021. our forecast of current-quarter GDP growth to 12.8%q/q saar,
Strengthening national resources in scientific and technologi- or 5.8%oya.
cal innovation, as well as enhancing self-sufficiency in Chi-
na’s supply chain, rank top priority. Priority tasks also include
42
Haibin Zhu (852) 2800-7039 Global Data Watch
Grace Ng (852) 2800-7002
Figure 1: China industrial enterprises' profits and sales revenue 2010 (Figure 2). Our seasonal adjustment shows export orders
%oya, ytd jumped 12.6%m/m sa in November, the largest monthly gain
40 Industrial
Industrial since March 2017, leaving sequential trend growth at
sales revenue
profits 18.7%3m/3m saar.
20
Figure 3: Taiwan export orders growth
0 %oya
40 Tech
-20
30 Non-tech
Total
-40 20
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 10
Source:NBS
0
Hong Kong: Trade stronger than expected -10

-20
Hong Kong SAR (HK)’s November trade activity came in 2015 2016 2017 2018 2019 2020 2021
stronger than expected (Figure 2). Exports grew 5.6%oya and Source: MOEA, J.P. Morgan
imports 5.1%, both beating market expectations. In sequential
term, exports rose 4.5%m/m sa and imports 3.3%. The trade The tech sector led the November export orders spike. Orders
balance registered a HKD 25.6 billion deficit. for tech products jumped 17.0%m/m sa and 38.0%oya in No-
vember. This reflects strong global demand for technology
Figure 2: Hong Kong merchandise trade
products for remote working and new smartphones and the
%3m/3m saar
80
boost from supply chain relocations amid the trend of tech-
Exports Imports nology decoupling between mainland China and the US. Or-
60 ders for telecommunication products registered the strongest
40 growth at 39.4%oya (or 21.7%m/m sa).
20 Non-tech orders were strong too, rising 3.3%m/m sa (our sea-
0 sonal adjustment) and 14.0%oya in November. In particular,
-20
export orders for base metals rose 25.2%oya, followed by
plastics and rubber (20.0%oya) and machinery (11.5%oya),
-40
while export orders for chemicals declined by 4.4%oya.
2018 2019 2020
Source: HK C&SD, J.P. Morgan
By destination, export orders from Europe grew the most,
surging 50.2%oya or 25.7%m/m nsa. The strong export orders
The breakdown of trade by destination shows that shipments performance in November was broad based, with orders from
to mainland China (8.0%m/m sa) and North Asia (7.1%m/m the US rising 30.6%oya, from mainland China and Hong
sa) led November exports, compared to a 1.5%m/m sa gain in Kong SAR 23.3%, ASEAN 22.9%, and Japan 25.3%.
exports to the US. The import gain was broad based (China:
4.9%m/m sa; US: 3.2%m/m sa; North Asia: 4.2%m/m sa). Industrial production rose 0.8%m/m sa in
November
The breakdown of exports by products shows mixed perfor-
mance. Tech sectors in general outperformed: exports of elec- Taiwan’s November IP report showed steady growth in indus-
trical products rose 4.8%m/m sa and exports of telecommuni- trial activity as IP rose 7.8%oya, following a downward revi-
cation products 5.1%. Machinery exports rose 6.8% in No- sion of October growth rate to 6.4%oya (previously
vember, but clothing exports fell 18.7%. 7.1%oya). Our seasonal adjustment process suggests IP rose
9.8%m/m sa in November, with the underlying sequential
Taiwan: Export orders surged to a new rec- trend showing solid growth of 18.2%3m/3m saar.
ord high in November The details of the November IP report show a notable gain in
Taiwan’s export orders (in US$ terms) surged 29.7%oya to a non-tech production (3.0%m/m sa), while tech activity rose
new record high of USD 57.7 billion in November, beating 0.3%m/m sa (Figure 4). Non-tech industrial production has
market expectations (consensus and JPM: 14.3%oya). No- been generally sluggish in recent years, but it seems to have
vember marked the ninth consecutive month of export orders gained momentum in recent months. The sequential trend of
growth (in %oya terms) and also the biggest gain since June non-tech IP strengthened to 35.3%3m/3m saar in November.
43
Haibin Zhu (852) 2800-7039 Greater China
Grace Ng (852) 2800-7002
Figure 4: Taiwan tech and nontech manufacturing IP (level) Consumer prices (21 Dec)
% change
Index, 2011=100, sa, 3mma
Sep Oct Nov
180 %oya -2.3 -2.3 -0.1 -0.1 -0.1 -0.2
Tech IP
170 %m/m sa -1.5 -1.5 2.2 2.2 0.1
160
150
140
Merchandise trade (28 Dec)
130 HK$ bn
120 Nontech IP Sep Oct Nov
110 Balance -12.7 -12.7 -36.8 -13.6 -25.9 -25.6
100 Exports 379.3 379.3 344.7 367.8 361.8 379.6
90 %oya 9.1 9.1 -1.1 5.5 0.7 5.6
2012 2014 2015 2016 2017 2018 2019 2020 2021 Imports 392.0 392.0 381.4 381.4 387.7 405.2
Source: MOEA, J.P. Morgan %oya 3.4 3.4 0.6 0.6 0.6 5.1
China: Taiwan:
Data releases and forecasts Data releases and forecasts
Week of December 31 – January 8 Week of December 31 – January 8
Thu Purchasing managers index Mon Markit manufacturing PMI
Dec 31 Index Jan 4 Index, sa
9:00am Sep Oct Nov Dec 8:30am Sep Oct Nov Dec
Overall (NBS) 51.5 51.4 52.1 51.9 Overall 55.2 55.1 56.9 57.2
Output 54.0 53.9 54.7 ___ Output 55.8 57.3 57.9 ___
Mon Purchasing managers index Thu Consumer prices

Jan 4 Index Jan 7 % change
9:00am Sep Oct Nov Dec 4:00pm Sep Oct Nov Dec
Overall (Markit) 53.0 53.6 54.9 54.7 %oya -0.6 -0.3 0.1 0.0
Output 54.2 54.5 57.1 ___ %m/m sa -0.1 0.2 0.3 0.2
Thu FX reserve Fri Merchandise trade

Jan 7 US$ tn Jan 8 US$bn
Sep Oct Nov Dec 4:00pm Sep Oct Nov Dec
Foreign reserve 3.14 3.13 3.18 3.21 Balance 7.1 7.5 5.3 5.3
Exports 30.7 32.2 32.0 32.5
Sat Monetary aggregates
%oya 9.3 11.2 12.0 10.2
Jan 9 %oya, bn yuan
Imports 23.6 24.8 26.7 27.2
Sep Oct Nov Dec
%oya -5.4 -1.0 10.0 0.7
M2 10.9 10.5 10.7 10.4
TSF flow 3469 1417 2130 2435
New loan creation 1900 690 1430 1235
Export orders (21 Dec)
Review of past week’s data % change
Sep Oct Nov
No data released %oya 9.9 9.9 9.1 8.8 14.3 29.7
%m/m, sa -1.0 -1.1 0.9 0.4 0.8 12.6
Hong Kong SAR:
Labor market survey (22 Dec)
Data releases and forecasts %
Sep Oct Nov
Week of December 31 – January 8
Unemployment rate, sa 3.78 3.80 3.77 3.76 3.77
Mon Retail sales volume Unemployment rate, nsa 3.83 3.80 3.80 3.80 3.75
Jan 4 % change
4:30pm Aug Sep Oct Nov Industrial production (23 Dec)
%oya -13.4 -13.3 -9.3 -7.7 % change
%m/m sa 0.0 3.5 -0.3 0.2 Sep Oct Nov
%oya 11.6 6.4 8.4 7.8
%m/m sa 4.6 4.6 -0.9 -0.9 0.8
Review of past week’s data Source: NBS, China Customs, Hong Kong Census and Statistics Department, Taiwan Ministry of
Economic Affairs, DGBAS, MoF, J.P. Morgan forecasts
44
JPMorgan Chase Bank, N.A., Seoul Branch Economic Research
Seok Gil Park (82-2) 758-5509 Global Data Watch
seok.g.park@jpmchase.com December 31, 2020
Jisun Yang (822) 758-5512
jisun.yang@jpmorgan.com
weaker than we previous envisaged; and we lower our 4Q real

Korea GDP growth forecast to 3.0%q/q, saar from 4.0% (Figure 1).
 November IP disappointed; we revise down 4Q GDP That said, as inventories should be rebuilt in 1Q21 and fiscal
growth forecast to 3.0%q/q saar stimulus is front-loaded, we see modestly higher growth in
1Q21; revising it up 0.5%pt to 3.0%q/q saar.
 Flash reports suggest customs exports firmed up further
in December Figure 1: Real GDP and non-farm all industry output
%q/q saar %3m/3m saar
 COVID-19 winter resurgence lingers; consumer senti-
15 20
ment index fell back
10 Real GDP
10
5
The year-end data continue to suggest a divergence between
goods and services demand. Regarding external goods de- 0 0
mand, we project that customs exports rose further in Decem- -5 Non-farm -10
ber in line with the flash reports. That said, the daily number -10 all industry output
of new COVID-19 cases lingers modestly above the early-
-15 -20
September peak, while the government’s social distancing 2015 2016 2017 2018 2019 2020 2021
measures are tighter than at the previous peak. While we con- Source: BoK, NSO, and J.P. Morgan, Dotted lines are JPM forecasts
tinue to see positive GDP growth momentum in 4Q as manu-
facturing strength should offset drags in services, November Flash reports hint at further exports gain in
IP modestly undershot our expectation and the drag on ser-
December
vices looms larger in December. Thus we revise down our 4Q
GDP growth forecast, yet with an upside revision for 1Q21. The flash reports continue to highlight that Korea’s customs
The government’s proposed a stimulus package amounting to exports are holding up above the pre-COVID level and have
0.5% of GDP from January should offset the drags in domes- outperformed the global mobility index (Figure 2). Based on
tic services in early 2021. The new package utilizes the saved the first-20-days exports flash report, we estimate that exports
budget buffer and front-loads expenditures without issuing a should rise 9.1%oya in December after 4.1% growth in No-
supplemental budget. vember. Seasonally adjusted, the first-20-day data suggest a
2.2%m/m sa monthly gain in December after 7.5% growth in
Disappointing November IP and expected November, which adds up to about 20% annualized quarterly
December drop in services activity growth in 4Q.
Industrial production rose 0.3%m/m sa in November after Figure 2: Google Activity Index and Korea's customs exports
falling 1.1% in October, undershooting expectations as the % change from baseline US$ bn, sa
production gain fell short of customs exports growth in the 20 Estimate based on 50
20-day flash report
month. Tech production rebounded strongly to recover from a 10 48
technical dip in October following the monthly growth dy- 46
0
namics in exports, while non-tech production fell on labor Korea's 44
strikes in the automobile industry. Producers’ inventory fell -10 customs exports 42
for the third straight month, dragging down the inventory-to- -20 40
Google 38
shipment ratio to the lowest level since December 2019. As a -30 Activity Index*
36
result, we expect sustained manufacturing output growth mo-
-40 34
mentum into 1Q21, as tech production should continue to Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
benefit from exports growth and non-tech production should Source: Google, MoTIE, and J.P. Morgan * based on Google's community mobility reports
recover from the automobile sector strike. Inventory buildup
should also boost production in early 2021.
Lingering COVID-19 cases weigh on con-
Services production rose robustly by November, but the out- sumer sentiment
look for December is grim. Services activity rose in Novem- Korea’s weekly COVID-19 new cases increased again in the
ber, marking a third monthly gain, but our high-frequency week ending December 26, rising above the previous peak
tracker based on credit card usage data suggests a sharp con- seen in early September. Winter seasonality is likely to make
traction in December, implying a three-month sequential con- the contagion linger more than in midyear, and the govern-
traction in December (around -3% annualized). In all, non- ment’s social distancing measures were extended another
farm all-industry output growth by December should be more week at a modestly tighter level than in September. With re-
45
Seok Gil Park (82-2) 758-5509 Korea
Jisun Yang (822) 758-5512
jisun.yang@jpmorgan.com
surgence of COVID-19 cases, the consumer sentiment index Producer prices (Dec 22)
fell 8.1pt in December after jumping 18.5pts over the prior % change
two months. In the near term, the resurgence of COVID-19 Sep Oct Nov
%oya -0.4 -0.4 -0.6 -0.5 -0.8 -0.3
cases should weigh on consumer spending in December and
in early 2021, as hinted at by our credit card usage tracker and
Stage of processing price index (Dec 22)
the fall in the spending plan index in the consumer sentiment % change
index (CSI) detail. That said, the upcoming fiscal stimulus Sep Oct Nov
may bolster consumer sentiment and spending in 1Q21. %oya -2.8 -2.8 -3.4 -3.4 -4.1 -3.0
Data releases and forecasts Consumer survey (Dec 29)

100=neutral reading, nsa
Week of December 31 – January 8
Oct Nov Dec
Index 91.6 91.6 97.9 97.9 88.0 89.8
Thu Consumer prices
Dec 31 % change
FKI business survey (Dec 30)
Index, sa
%oya 1.0 0.1 0.6 0.5
Oct Nov Dec
%m/m, nsa 0.7 -0.6 -0.1 0.1
One-month outlook 96.4 96.4 97.4 97.4 90.0 90.2
Current conditions 95.0 95.0 95.4 95.4 90.0 90.9
Fri Customs trade
Jan 1 US$ bn, nsa
Industrial production (Dec 30)
% change
Trade balance 8.5 5.8 5.9 8.8
Sep Oct Nov
Exports 47.9 44.9 45.8 52.1
%oya 8.1 8.2 -2.2 -2.0 2.0 0.5
Imports 39.4 39.1 39.9 43.3
%m/m, sa 5.5 5.6 -1.2 -1.1 1.5 0.3
Mon Purchasing Managers Index Producer shipments and inventories (Dec 30)
Jan 4 Index, sa
%oya
Sep Oct Nov
PMI - Manufacturing 49.8 51.2 52.9 53.0
Shipments 6.8 7.0 -3.2 -3.0 3.2 1.3
Inventories 0.4 -0.1 -0.3 0.7 -1.3
Fri Current account
Jan 8 US$ bn, nsa Composite leading indicator (Dec 30)
8:00am Aug Sep Oct Nov 2015=100, sa
Balance 6.6 10.1 11.7 12.0 Sep Oct Nov
Index 122.0 122.0 122.8 122.9 123.7 124.0
Review of past weeks’ data
Service activity (Dec 30)
% change
Monetary aggregates (Dec 15)
Sep Oct Nov
%oya, monthly average
%oya 0.1 0.1 -2.5 -2.5 -1.9 -1.4
Aug Sep Oct
M2 9.5 9.5 9.2 9.2 9.0 9.7
Lf 7.9 7.9 7.9 7.9 7.8 8.1 Consumption goods sales (Dec 30)
% change
Sep Oct Nov
Unemployment rate (Dec 16)
%oya 4.3 4.4 -0.2 -0.1 0.8 -1.5
% of labor force
%m/m, sa 1.6 1.7 -0.9 -1.0 1.0 -0.9
Sep Oct Nov
Seasonally adjusted 3.9 3.9 4.2 4.2 4.1 4.1
Not seasonally adjusted 3.6 3.6 3.7 3.7 3.5 3.4 Source: NSO, Customs office, Markit, BoK, FKI, and J.P. Morgan forecasts
Import and export prices (Dec 16)

%oya, in local currency terms
Sep Oct Nov
Export prices -5.9 -5.9 -6.4 -6.2 -6.6 -4.9
Import prices -11.3 -11.3 -11.6 -11.2 -12.1 -10.6
46
JPMorgan Chase Bank, N.A., Sin- Economic Research
gapore Branch Global Data Watch
Sin Beng Ong (65) 6882-1623 December 31, 2020
sinbeng.ong@jpmorgan.com
ASEAN Figure 1: Singapore real GDP growth

%
 COVID-19 delivered an unusual shock, collapsing both 25
manufacturing and non-manufacturing equally
15 %2q, saar
 2021 recovery hinges on the normalization of mobility,
5
with its subsequent impact on services and construction
-5
 Output gaps are expected to remain negative and sug- %oya
gest subdued core inflation -15
 SG$ NEER thus expected to remain unchanged through -25

2021 13 14 15 16 17 18 19 20 21
Source: MTI and J.P. Morgan forecasts in shaded area
The 2020 shock from COVID-19 has led to an unusual cou- Figure 2: Singapore real GDP index
pling between the goods- and services-producing sectors. The Index, 4Q19=100, sa
restrictions on movement and international travel have ad- 105
versely affected the services sector and explain the plunge in
overall activity, far exceeding the impact from the goods sec- 100
tor. In past recessions, the non-manufacturing sector had pro-
vided an offset to the weakness in the goods sector; the non- 95
manufacturing sector adding to the growth hit, rather than
acting as a cushion, is what makes the COVID-19 shock unu- 90
sual. Our baseline forecast projects that the calibrated reopen-
ing and the raft of measures in place to prevent imported in- 85
2019 2020 2021
fections should reduce the need for strict lockdowns in re- Source: DOS and J.P. Morgan forecasts in shaed area
sponse to future COVID-19 infections, thus reducing the im-
pact on the services sector. Figure 3: Singapore contribution to growth by sector
%-pt contribution to %oya growth
The expected normalization of the non-manufacturing sector, 10
which accounts for 80% of GDP, should provide an offset to 8 Services
6
the undulations in the goods-producing sector, effectively 4
reverting back to the prior trends. Thus, the 2021 growth fore- 2
cast pencils in a goods-led recovery, which began in 3Q20, 0
-2 Manufacturing
helped by a gradual revival of domestic services. Even then, -4
the recovery is expected to be varied across sectors, with the -6
travel-related sectors particularly dependent on the broader -8
-10
opening up of cross-border travel. The upshot is that underly- 05 07 09 11 13 15 17 19 21
ing price pressures are expected to build gradually over the Source: DoS, J.P. Morgan
course of 2021.
Figure 4: Singapore contribution of services to growth
The anticipated shape of the recovery, together with slow- %-pt contribution to %oya growth
moving core inflation, suggests that monetary policy settings 6 Business services, wholesale
will remain accommodative through 2021, reflected in a flat 4 trade and finance
SGD NEER slope and low money market rates.
2
0
Not your usual recession
-2
The 2020 COVID-19 shock delivered an unprecedented de-
cline in growth, cratering both the goods- and services- -4
Other services
producing sectors. Our 2021 forecast pencils in a gradual re- -6
covery in the services sector, which should provide some bal- 05 07 09 11 13 15 17 19 21
Source: MTI
last to the broader recovery (Figure 1). Moreover, the availa-
bility of a vaccine should boost travel-related incomes in The goods-producing sector, which historically has been the
2H21, providing an extra fillip to growth (Figure 2). marginal driver of growth, has been unusually resilient in
47
JPMorgan Chase Bank, N.A., Singapore Branch Economic Research
Sin Beng Ong (65) 6882-1623 ASEAN
sinbeng.ong@jpmorgan.com December 31, 2020
2020. The bulk economic weakness has come from the ser- 0%-1%oya range anticipated by the MAS, consistent with the
vices and construction sectors when in the past those same anticipated recovery in labor earnings and commercial rents
sectors have helped even-keel growth amid swings in the (Table 1 and Figure 7).
manufacturing sector (Figure 3). Moreover, the COVID-19
shock has affected sectors that have historically been more Table 1: Estimates of Singapore core CPI
resilient, including business services, wholesale trade, and %oya, local currency terms, 2010-2019
finance (Figure 4). Independent variable Lag Coefficient T-stat
Constant None 0.43 5.17
We attribute a good part of the shock to the containment Core 1-mo 0.60 11.33
measures in 1H20, which have been subsequently eased in Crude oil prices 4-mo 0.04 2.80
late 2Q20 and through 3Q20. Thus, the gradual normalization Commercial rents 9-mo 0.01 6.19
of these service-related sectors to prior levels of activity Labor earnings 1-mo 0.02 4.14
should provide a boost to growth over the course of the next R-squared 0.89
few quarters. Moreover, a similar expectation also underpins SER 0.24 DW stat. 1.87
the global economy in 2021 and should deliver an added Dependent variable: Core CPI inflation. Source: J.P. Morgan estimates
boost to the manufacturing sector.
Figure 7: Singapore core CPI
Figure 5: Singapore employment and average monthly earnings %oya
%oya 3
12
Fitted
2
8
Earnings 1
4 Actual
0
0
Employment -1
-4 13 14 15 16 17 18 19 20 21
05 07 09 11 13 15 17 19 21 Source: DOS and J.P. Morgan forecasts in shaded area
Source: DOS and MOM
Flat NEER expected in 2021

Figure 6: Singapore employment by sector
%pt. contribution to %oya employment growth Our expected path of core inflation is consistent with flat
15
NEER slope over the course of 2021 (Figure 8). Moreover,
with global interest rates expected to remain broadly stable
Overall
10 through 2021, the NEER path suggests that domestic interest
rates should remain low under interest parity conditions (Fig-
5 ure 8).
Non-mfg
0 Figure 8: SGD NEER

%oya
Mfg Actual
-5 6
05 07 09 11 13 15 17 19 21
Source: MOM
4
Slack remains despite cyclical lift 2

Despite the cyclical revival, the damage to employment re- Fitted
mains material. Employment is expected to recover with a lag 0
following a decline that has surpassed that of the 2008 crisis
(Figure 5). As with output, the bulk of the employment de- -2
05 08 11 14 17 20
cline has come from the non-manufacturing sectors, and given Source: J.P. Morgan forecasts in shaded area
the multi-speed recovery across the various service sectors,
we expect the employment recovery to be similarly variegated
(Figure 6). Thus, we expect core inflation to be benign, aver-
aging 0.4%oya in 2021, just shy of the midpoint of the
48
Seok Gil Park (82-2) 758-5509 Global Data Watch
Data releases and forecasts PMI—electronics 50.9 51.0 51.1 51.1
ASEAN Review of past week’s data
Indonesia No data releases.
Data releases and forecasts Thailand:

Week of January 4 – 8 Data releases and forecasts
Mon Consumer prices Week of January 4 – 8
Jan 4 % change
Mon Consumer prices
Jan 4 % change
Total, %oya 1.4 1.4 1.6 1.6
%m/m, sa 0.3 0.1 0.3 0.2
Total, %oya -0.7 -0.5 -0.4 -0.7
%m/m, sa -0.3 0.1 0.1 0.0
Review of past week's data
No data releases.
Manufacturing production (Dec 29)
Malaysia % change
Sep Oct Nov
Data releases and forecasts %oya -2.1 -0.4 -0.3 0.4
Week of January 4 – 8 %m/m, sa 4.3 3.1 … -1.0
No data releases. Private investment index (Dec 30)

% change
Review of past week's data Sep Oct Nov
%oya -1.9 -5.1 -2.0 0.7
Merchandise trade (Dec 28) %m/m, sa 2.9 -2.2 0.1 3.2
US$ bn nsa
Sep Oct Nov Private consumption index (Dec 30)
Trade balance 5.3 5.3 5.1 4.1 % change
Exports, %oya 14.5 1.1 0.9 5.4 Sep Oct Nov
Imports, %oya -2.8 -5.1 -4.1 -8.0 %oya 3.0 -0.7 -1.2 2.0
%m/m, sa 2.3 -1.1 0.2 0.9
Philippines: Merchandise trade (Dec 30)
Data releases and forecasts % change
Sep Oct Nov
Week of January 4 – 8 Trade balance 3.2 3.2 3.0 1.9
Exports, %oya -4.2 -5.6 -3.3 -3.1
No data releases.
Imports, %oya -8.1 -12.1 -9.5 -3.3
Vietnam:
No data releases. Data releases and forecasts
Singapore: Week of January 4 – 8
Data releases and forecasts No data releases.

Mon Real GDP
Jan 4 % change No data releases.
8:00am 1Q20 2Q20 3Q20 4Q20
%oya -0.3 -13.3 -5.8 -5.1 Source: Central Bureau of Statistics, Indonesia; Department of Statistics, Malaysia Coordination
%q/q, saar -3.2 -43.2 42.3 3.5 Board and National Statistics Office, Philippines, Singapore Statistics Department, Office for
Industrial Economics, Thailand; Bank of Thailand; General Statistics Office of Vietnam; J.P.
Mon Purchasing managers index Morgan forecasts
Jan 4 % change
PMI 50.3 50.5 50.4 50.4
49
JPMorgan Chase Bank, N.A., Mumbai Branch Economic Research
Sajjid Z Chinoy (91-22) 6157-3386 India
sajjid.z.chinoy@jpmorgan.com December 31, 2020
Toshi Jain (91-22) 6157-3387
toshi.jain@jpmorgan.com
Among activity indicators, auto sales and the number of GST

India E-way bills fell in November, while GRR mobility and cargo
 Composite activity indicator reveals that recovery traffic made large gains. The number of GST bills fell to 57.7
stalled in November million in November from 64.2 million in October, giving
back all the gains of October. Auto sales dropped 3.7% m/m,
 This comes after solid gains in September and October sa in November after posting five consecutive increases.
due to inventory build-up for the festive season However, auto sales and the number of GST E-way bills are
 Activity does not appear to have made any large gains still above pre-pandemic levels (Figure 2).
in December either
Figure 2: E-ways and auto sales activity
Index, avg Jan and Feb = 100
The data for November and December suggests the recovery Auto sales
120
has stalled after making large strides in September and Octo-
ber, supported by inventory build-up for the festive season. 100
E-ways bills
As manufacturing activity now normalizes some payback was 80
to be expected. The fall in manufacturing activity was offset 60
by gains in discretionary services in November, proxied by 40
Google Retail and Recreation mobility (GRR). That said, the 20
GRR recovery has also come to a standstill in December. In-
0
deed, most of the high-frequency data in December suggest Feb-20 May-20 Aug-20 Nov-20
no large improvements. In this context, next week’s PMI is Source: J.P. Morgan
keenly awaited to get a better sense of activity in December.
Meanwhile, GRR mobility continued to rise, increasing from
Recovery stalls in November 65% of the pre-pandemic level in October to 73% in Novem-
Our composite activity indicators, which track 11 real econo- ber. Similarly, cargo traffic rose from 96% of the pre-
my indicators, reveal that the recovery stalled in November pandemic level in October to 99.5% in November (Figure 3).
after making large strides in September and October. This
Figure 3: Cargo traffic and google retail and recreation
should not come as a surprise as the ramp-up in activity in
September and October was supported by inventory build-up Index, avg Jan and Feb = 100
to meet November Diwali demand. Once past this boost, 120 Cargo traffic
manufacturing activity is beginning to give back some of 100
gains, as captured by the 10% sequential fall in the number of 80 Google retail and recreation
GST E-way bills generated in November (IP for November mobility
60
will only be released in mid-January). That said, the fall in
40
manufacturing activity was offset by continued recovery in
discretionary services, proxied by GRR mobility. Quantita- 20
tively the composite activity index for November was 96, 0
unchanged from October (January-February average indexed Feb-20 May-20 Aug-20 Nov-20
Source: J.P. Morgan
to 100). The index jumped from 84 in August to 92 in Sep-
tember and 96 in October (Figure 1).
Elsewhere, imports ex oil and gold and railway freight in-
Figure 1: Monthly activity Indicator creased in November while petroleum consumption declined.
Index, avg Jan and Feb = 100 Electricity consumption and exports ex oil were about flat.
120
No large gains in December either
100
80 In December, we have limited data, but the early read from
60
high-frequency indicators suggests no large gains in activity.
Daily electricity consumption on average grew 4.4%oya in
40
December to date, not very different from 3.6% in November
20
(Figure 4). Google Grocery and Pharmacy mobility (GGR)
0 softened from 110% of the pre-pandemic level in November
Feb-20 May-20 Aug-20 Nov-20
to 108% in December, and GRR was unchanged at 72% (Fig-
Source: J.P. Morgan
ure 5). Workplace-related mobility did rise, but linkage be-
50
JPMorgan Chase Bank, N.A., Mumbai Branch Economic Research
Sajjid Z Chinoy (91-22) 6157-3386 Global Data Watch
sajjid.z.chinoy@jpmorgan.com December 31, 2020
Toshi Jain (91-22) 6157-3387
toshi.jain@jpmorgan.com
tween workplace mobility and actual activity is hard to estab- All in all, high-frequency data do not reveal any large gain in
lish in the prevalent work-from-home environment. activity in December.
Figure 4: Electricity consumption

% oya, 7D MA
Week of January 4– 8
20
10 Mon Manufacturing PMI
Jan 4 Index
0 Sept Oct Nov Dec
-10 Index 56.8 58.9 56.3 -
-20 Wed Services PMI

-30 Jan 6
Feb 20 Apr 20 Jun 20 Aug 20 Oct 20 Dec 20 Sept Oct Nov Dec
Source: POSOCO Index 49.8 54.1 53.7 -
Figure 5: Google mobility

% of pre-pandemic level Retail and recreation Review of past week’s data
120 Grocery & Pharmacy
Workplace No data releases
100
80 Source: Central Statistical Organization, RBI, Ministry of Commerce, IHS-Markit and J.P. Morgan
forecasts
60
40
20
Feb 20 Apr 20 Jun 20 Aug 20 Oct 20 Dec 20
Source: Google
The only high-frequency indicator that marked meaningful

improvement in December was vehicle registrations. Vehicle
registrations are presently just 4% lower than last year (30
days rolling registrations) compared to 25% below in Novem-
ber (Figure 6). However, registrations data cannot be taken at
face value as they are distorted by the change in festive season
month—Diwali in 2020 was in November and in 2019 it was
in October. Cumulatively vehicle registrations from October
to 22 December are still down 20% compared to last year.
The breakdown of auto sales reveals that weakness is led by
two wheelers.
Figure 6: Vehicle registrations

% oya, 30d m.a.
0
-20
-40
-60
-80
-100
Apr 20 May 20 Jun 20 Jul 20 Aug 20 Sep 20 Oct 20 Nov 20 Dec 20
Source: Vahaan
51
Jisun Yang (822) 758-5512 Asia focus: BoP trends
jisun.yang@jpmorgan.com December 31, 2020
Asia focus: BoP trends Figure 3: Changes in exports and imports of goods in EM Asia
US$ bn, quarterly average, 3Q20 vs. 1H20
Current account surpluses widened broadly in EM Asia in 20 Exports
3Q20 after narrowing in 1H20 (Figure 1), mainly due to an Imports (+ = compression)
increase in goods trade surpluses. Goods trade surpluses ex- Balance
10
panded throughout the region (Figure 2), as exports rose with
global demand recovering from the pandemic shock, while
growth in imports was slower than in exports likely due to 0
weak domestic demand (Figure 3). For some economies like
Korea, terms of trade gains (i.e., increases of export prices
-10
against import prices) also contributed to the increase in trade TWN KOR SGP THA MYS IDN
surpluses. Source: National sources, J.P. Morgan
In 3Q20, Korea’s and Taiwan’s CA surpluses increased the Relative to GDP, Singapore’s CA surplus increased notably
most in absolute terms in EM Asia ex China/India, on the as well (Figure 4). In South East Asia, not only trade of goods
back of robust goods exports. After falling to an eight-year but also non-merchandise components (including services) are
low in 2Q20, Korea’s trade surplus rebounded sharply, with important determinants of current account balances. For ex-
the gain in 3Q20 almost enough to offset losses in 1H20. ample, Thailand’s services balance moved into deficit this
Taiwan was also remarkable as its trade balance surged in year for the first time since 2014 amid limited cross-border
3Q20 even after remaining relatively resilient in 1H20. As travel, and the gain in the goods surplus did not make up this
their exports of goods remained robust in 4Q20, Korea and loss. As a result, Thailand’s year-to-date CA surplus is run-
Taiwan are likely to post higher current account surpluses in ning 37% lower than in the same three-quarter period last year
2020 than in 2019 (Figures 1-3). (Figures 4-5).
Figure 1: Current account balances in EM Asia ex China/India Figure 4: Current account balances in EM Asia ex China/India
US$ bn, quarterly average % of GDP
1H19 3Q19 1H20 3Q20 20 1H19 3Q19 1H20 3Q20
40
30 15
20 10
10 5
0 0
-10 -5
TWN KOR SGP THA MYS IDN SGP TWN KOR THA MYS IDN
Source: National sources, J.P. Morgan Source: National sources, J.P. Morgan
Figure 2: Goods trade balances in EM Asia ex China/India Figure 5: Non-merchandise* balances in EM Asia ex China/India
US$ bn, quarterly average % of GDP
1H19 3Q19 1H20 3Q20 10 1H19 3Q19 1H20 3Q20
30
5
20
0
10
-5
0 -10
TWN KOR SGP THA MYS IDN SGP TWN KOR THA MYS IDN
Source: National sources, J.P. Morgan *services, income and current transfers
Source: National sources, J.P. Morgan
52
Daniel Silver (1-212) 622-6039 Global Data Watch
US economic calendar
Monday Tuesday Wednesday Thursday Friday
4 Jan 5 Jan 6 Jan 7 Jan 8 Jan
Manufacturing PMI (9:45am) ISM manufacturing (10:00am) ADP employment (8:15am) Initial claims (8:30am) Employment (8:30am)
Jan flash 56.3 Dec 56.5 Dec w/e Jan 2 Dec -25,000
Construction spending Light vehicle sales Services PMI (9:45am) International trade (8:30am) Unemployment rate 6.7%
(10:00am) Dec 16.3mn Dec final 55.0 Nov -$67.8bn Average weekly hours 34.8
Nov 1.2% Factory orders (10:00am) ISM services (10:00am) Wholesale trade (10:00am)
Chicago Fed President Evans speaks Nov 0.6% Dec 55.0 Nov
Atlanta Fed President Bostic speaks (3:45pm) Consumer credit (3:00pm)
(10:00am) New York Fed President Williams FOMC minutes Announce 10-year note (r) $38bn Nov
Chicago Fed President Evans speaks speaks (3:45pm) Announce 30-year bond (r) $24bn
(10:00am) Announce 3-year note $58bn
Cleveland Fed President Mester speaks
(12:15pm) Philadelphia Fed President Harker
Cleveland Fed President Mester speaks speaks (9:00am)
(6:00pm) St. Louis Fed President Bullard speaks
(12:00pm)
Chicago Fed President Evans speaks
(1:00pm)

Auction 3-year note $58bn NFIB survey (6:00am) CPI (8:30am) Initial claims (8:30am) Retail sales (8:30am)
Dec Dec w/e Jan 9 Dec
Atlanta Fed President Bostic speaks JOLTS (10:00am) Beige book (2:00pm) Import prices (8:30am) PPI (8:30am)
(12:00pm) Nov Federal budget (2:00pm) Dec Dec
Dallas Fed President Kaplan speaks
(6:00pm) Dec Empire State survey (8:30am)
Auction 10-year note (r) $38bn Announce 10-year TIPS $15bn Jan
Auction 30-year bond (r) $24bn Announce 20-year bond (r) $24bn Industrial production (9:15am)
Dec
Philadelphia Fed President Harker Atlanta Fed President Bostic speaks Business inventories (10:00am)
speaks (2:00pm) (11:00am)
Fed Chair Powell speaks (12:30pm)
Nov
Consumer sentiment (10:00am)
Jan prelim

Martin Luther Kind, Jr. Day, Business leaders survey NAHB survey (10:00am) Initial claims (8:30am) Manufacturing PMI (9:45am)
markets closed (8:30am) Jan w/e Jan 16 Jan flash
Jan Housing starts (8:30am) Services PMI (9:45am)
TIC data (4:00pm) Auction 20-year bond (r) $24bn Dec Jan flash
Nov Philadelphia Fed manufacturing Existing home sales (10:00am)
(8:30am) Dec
Jan
Auction 10-year TIPS $15bn

Dallas Fed manufacturing Philadelphia Fed nonmanufac- Durable goods (8:30am) Initial claims (8:30am) Personal income (8:30am)
(10:30am) turing (8:30am) Dec w/e Jan 23 Dec
Jan Jan FOMC meeting (2:00pm) Real GDP (8:30am) Employment cost index (8:30am)
FHFA HPI (9:00am) Jan 4Q advance 4Q
Nov Advance economic indicators Chicago PMI (9:45am)
S&P/Case-Shiller HPI (9:00am) FOMC statement (2:00pm) and (8:30am) Jan
Nov press conference (2:30pm) Dec Consumer sentiment (10:00am)
Consumer confidence (10:00am) Leading indicators (10:00am) Jan final
Jan Dec Pending home sales (10:00am)
Richmond Fed survey (10:00am) New home sales (10:00am) Dec
Jan Dec
Dallas Fed services (10:30am) KC Fed survey (11:00am)
Jan Jan
FOMC meeting
Source: Private and public agencies and J.P. Morgan. Further details available upon request.
53
Greg Fuzesi (44-20) 7134-8310 Global Data Watch
greg.x.fuzesi@jpmorgan.com December 31, 2020
Euro area economic calendar

Euro area: Euro area: Euro area: Euro area: Euro area:
PMI mfg final (10:00am) Dec M3 money supply (10:00) Nov PMI serv. & comp (10:00am) Dec EC cons. Conf. (11:00am) Dec Unemployment rate (11:00am) Nov
55.5 Germany: Services: 47.3 Economic conf. : 91.0 8.6%, sa
Germany: Employment (9:55am) Dec Composite: 49.8 Consumer conf. :-13.9 Germany:
PMI mfg final (9:55am) Dec Change m/m, 000s,sa: 0 PPI (11:00am) Nov HICP flash (11:00am) Dec Foreign trade (8:00am) Nov
58.6 Unemployment (9:55am) Dec MFI interest rates (10:00am) Nov -0.2%oya, nsa Industrial production (8:00am) Nov
France: Registered (ch, m/m, 000, sa):15 Germany: Core: 0.2%oya, nsa Ind. incl constr. : 2.5%m/m, sa
PMI mfg final (9:50am) Dec 6.1%, sa PMI serv. & comp (9:55am) Dec Retail sales (11:00am) Nov Ind. ex constr. : 2.8%m/m, sa
51.1 Retail sales (8:00am) Nov Services: 47.7 -5.0%m/m, sa Manufacturing: 3.0%m/m, sa
Italy: 0.0%m/m, sa Composite: 52.5 Germany: Construction: 1.0%m/m, sa
PMI mfg final (9:45am) Dec France: CPI 6 states & flash (2:00pm) Dec Mfg orders (8:00am) Nov Energy: 1.0%m/m, sa
Spain: CPI prelim (8:45am) Dec France: Total: 1.0%m/m, sa France:
PMI mfg final (9:15am) Dec 0.4%m/m, nsa INSEE cons. conf. (8:45am) Dec Italy: Cons. of mfg goods (8:45am) Nov
0.2%oya, nsa PMI serv. & comp (9:50am) Dec CPI prelim (11:00am) Dec Foreign trade (8:45am) Nov
HICP: 0.1%oya Italy: Industrial production (8:45am) Nov
PMI serv. & comp (9:45am) Dec -5.0%m/m, sa
Spain:
PMI serv. & comp (9:15am) Dec

Netherlands: Euro area: Euro area: Euro area:
CPI (6:30am) Dec Industrial prod. (11:00am) Nov Monetary policy account (1:30pm) Foreign trade (11:00am) Nov
Construction output (11:00am) Nov France: France:
Italy: CPI final (8:45am) Dec Monthly budget (8:45am) Nov
Industrial prod. (10:00am) Nov Spain:
CPI final (9:00am) Dec
HICP final (9:00am) Dec

Italy: Euro area: Euro area: Euro area: Euro area:
CPI final (10:00am) Dec BoP (10:00am) Nov HICP final (11:00am) Dec ECB rate (1:45pm) Jan PMI mfg prelim (10:00am) Jan
Bank lending survey (10:00am) Q4 Germany: EC cons. Conf. flash (4:00pm) Jan PMI serv. & comp (10:00am) Jan
New car regs (8:00am) Dec PPI (8:00am) Dec France: ECB’s survey of prof. forecasters
Germany: INSEE bus. conf. (8:45am) Jan Germany:
CPI final (8:00am) Dec Belgium: PMI mfg prelim (9:30am) Jan
ZEW bus. survey (11:00am) Jan BNB cons. conf. (11:00am) Jan PMI serv. & comp (9:30am) Jan
Italy: France:
Foreign trade (10:00am) Nov PMI mfg prelim (9:15am) Jan
PMI serv. & comp (9:15am) Jan

Germany: Germany: Euro area: Germany:
IFO bus. survey (10:00am) Jan GfK cons. conf. (8:00am) Feb EC cons. Conf. final (11:00am) Jan GDP prelim (8:00am) 4Q
Belgium: France: Germany: Employment (9:55am) Jan
BNB bus. conf. (3:00pm) Jan INSEE cons. conf. (8:45am) CPI 6 states and prelim (2:00pm) Unemployment (9:55am) Jan
Jan Import price index (8:00am) Dec
Belgium: M3 money supply (10:00am) Dec
CPI (8:00am) Jan France:
Netherlands: Cons. of mfg goods (7:30am) Dec
CBS bus. conf. (6:30am) Jan GDP prelim (7:30am) 4Q
PPI (8:45am) Dec
Italy:
ISAE bus. conf. (10:00am) Jan
ISAE cons. conf. (10:00am) Jan
PPI (10:00am) Dec
Spain:
CPI flash (9:00am) Jan
GDP prelim (9:00am) 4Q
HICP flash (9:00am) Jan
Belgium:
GDP prelim (11:00am) 4Q
Highlighted data are scheduled for release on or after the date shown. Times shown are local. Source: Private and public agencies and J.P. Morgan. Further
details available upon request.
54
JPMorgan Securities Japan Co., Ltd. Economic Research
Hiroshi Ugai (81-3) 6736-1173 Global Data Watch
Japan economic calendar

28 Dec 29 Dec 30 Dec 31 Dec 1 Jan

IP prelim Holiday: Japan Holiday: Japan
(8:50am) Nov 2.5%m/m, sa
Summary of Opinions of Dec 17-18

BoJ Monetary Policy Meeting
(8:50am)

PMI manufacturing final Auto registrations Consumer sentiment Employers’ survey All household spending
(9:30am) Dec (2:00pm) Dec (2:00pm) Dec (8:30am) Nov (8:30am) Nov
PMI services final Consumption activity index
(9:30am) Dec (2:00pm)
Coincident CI
(2:00pm)
Auction 3-month bill Auction 10-year note Auction 6-month bill Auction 3-month bill
Auction 30-year note

Holiday: Japan Bank lending M2 Corporate goods prices Tertiary sector activity index
(8:50am) Dec (8:50am) Dec (8:50am) Dec (1:30pm) Nov
Current account Private machinery orders
(8:50am) Nov (8:50am) Nov
Economy Watchers’ survey
(2:00pm) Dec
Auction 5-year note Auction 3-month bill
Times shown are local. Source: Private and public agencies and J.P. Morgan. Further details available upon request.
55
Silvana Dimino (1-212) 834-5684 Global Data Watch
Canada economic calendar

Markit manufacturing PMI IPPI (8:30am) International trade (8:30am) Labor Force Survey (8:30am)
(9:30am) Dec -0.6% Nov -C$3.5bil Dec -80,000 (-0.4%)
Dec Ex energy -0.9% Ivey PMI (10:00am) Unemployment rate 8.7%
Dec 48.0
J.P.Morgan composite 48.0

BoC Business Outlook Sur- New vehicle sales (8:30am)
vey/Canadian Survey of Con- Nov
sumer Expectations (10:30am) Existing home sales (9:00am)
4Q Dec

Housing starts (8:15am) Manufacturing sales (8:30am) CPI (8:30am) New housing price index Retail sales (8:30am)
Dec Nov Dec (8:30am) Nov
International transactions in Wholesale sales (8:30am) Teranet/National Bank HP Index Dec
securities (8:30am) Nov (8:30am)
Nov Dec
Bank of Canada Rate an-
nouncement/Monetary Policy
Report (10:00am)

CFIB Business Barometer Index Monthly GDP (8:30am)
(6:00am) Nov
Jan IPPI (8:30am)
Building permits (8:30am) Dec
Nov
Payroll employment (8:30am)
Nov
All existing home sales are tentative. Times shown are local.Source: Private and public agencies and J.P. Morgan. Further details available upon request.
56
Banco J.P.Morgan, S.A., Institución de Banca Economic Research
Múltiple, J.P.Morgan Grupo Financiero Global Data Watch
Latin America economic calendar

Argentina: Colombia: Argentina: Chile: Brazil:
Tax revenue Dec 2.4%oya CPI Dec Vehicle production Dec Trade balance Dec US$1.4bn IGP-DI Dec 0.76%m/m;
Chile: Uruguay: Vehicle sales Dec Mexico: 23.09%oya
Economic Activity 0.70%m/m; CPI Dec -0.2%m/m; 9.4%oya Biweekly core CPI Dec IP Nov 0.5%m/m; 1.5%oya
0.10%oya 0.09%2w/2w; 3.81%oya Mexico:
CPI Dec 0.22%m/m; 2.85%oya Biweekly CPI Dec 0.28%2w/2w; Auto report Dec
IMCE Business Confidence Dec 54 3.18%oya
Mexico: Core CPI Dec 0.55%m/m;
Remittances Nov US$3.3bn 3.81%oya
IMEF manufacturing index Dec CPI Dec 0.43%m/m; 3.20%oya
47.9
IMEF nonmanufacturing index Dec
48.5
Peru:
CPI Dec 0.13%m/m; 2.05%oya

Mexico: Brazil: Peru: Brazil:
IP Nov IPCA Dec BCRP meeting Jan Retail sales Nov
Peru: Mexico: Peru:
Trade balance Nov GFI Oct Economic Activity Nov
National Unemployment rate Dec

Colombia: Brazil: Mexico: Mexico:
IP Nov COPOM meeting Jan Unemployment Dec Biweekly core CPI
Retail sales Nov Colombia: Biweekly CPI
Trade balance Nov

Mexico: Mexico: Chile: Brazil: Colombia:
GDP monthly proxy Nov Retail sales Nov BCC meeting Jan IGP-M Jan Banrep meeting Jan
Mexico: Mexico:
Trade balance Dec PS budget balance
Times shown are local. Private and public agencies and J.P. Morgan. Further details available upon request.
57
Allan Monks (44-20) 7134-8309 Global Data Watch
Lisa Alexandersson (44-20) 7134-3680 December 31, 2020
UK and Scandinavia Calendar

United Kingdom: United Kingdom United Kingdom: United Kingdom: United Kingdom:
M4 & M4 lending final (9:30am) New car regs (9:00am) Dec New car regs (9:00am) Dec PMI Construction (9:30am) Dec Halifax HPI (8:30am) Dec
Nov PMI Services final (9:30am) Dec Decision maker panel survey Quarterly productivity (9:30am) 3Q
Net lending to ind. (9:30am) Nov Services: 49.9 (9:30am) Dec Markit jobs report (12:01am) Dec
PMI Mfg final (9:30am) Dec Composite: 50.7 Sweden: Sweden:
Overall index: 57.3 Norway: Services PMI (8:30am) Dec Industrial production & orders
Output: 55.3 Credit indicator growth (8:00am) (9:30am) Nov
BCC quarterly economic survey Nov Speech by BoE’s Hauser (2:00pm) Household consumption (9:30am)
(12:01am) 4Q Nov
Sweden: Norway:
PMI (8:30am) Dec IP Mfg (8:00am) Nov
Norway:
PMI Mfg (10:00am) Dec

Norway: United Kingdom: United Kingdom: United Kingdom:
CPI (8:00am) Dec BRC retail sales monitor (12:01am) RICS HPI (12:01am) Dec Index of services (7:00am) Nov
PPI (8:00am) Dec Dec Sweden: Industrial production (7:00am) Nov
Sweden: PES unemployment (6:00am) Dec Trade balance (7:00am) Nov
Budget Balance (9:30am) Dec Monthly GDP (9:30am) Nov
Norway: Sweden:
Monthly GDP (8:00am) Nov CPI (9:30am) Dec
Norway:
Trade balance (8:00am) Dec

United Kingdom: United Kingdom: United Kingdom: United Kingdom:
Rightmove HPI (8:00am) Jan CPI (7:00am) Dec BoE quarterly credit conditions Public sector finances (7:00am)
ONS HPI (9:30am) Nov (9:30am) 4Q Dec
Sweden: CBI industrial trends (11:00am) 4Q Retail sales (7:00am) Dec
Valueguard house price data Norway: PMI Mfg prelim (9:30am) Jan
(6:00am) Dec Business tendency survey PMI Services prelim (9:30am) Jan
(8:00am) 4Q Gfk cons. conf. (10:00am) Jan
Norges Bank rate (10:00am) Jan
Building statistics (10:00am) Dec

United Kingdom: Sweden: United Kingdom: Sweden:
Labor market report (7:00am) Dec Trade balance (9:30am) Dec Car manufacturing (12:01am) Dec Household lending (9:30am)
Sweden: Prospera inflation expectations Economic sentiment survey Financial markets statistics
PPI (9:30am) Dec (8:00am) Jan (10:00am) Jan (9:00am) Dec
Sweden: Norway:
Consumer confidence (9:00am) Credit indicator growth (8:00am)
Jan Labor directorate unemployment
Economic Tendency survey (10:00am) Jan
(9:00am) Jan
Labor force survey (9:30am) Dec
Retail sales (9:30am) Dec
Norway:
AKU unemployment (8:00am) Nov
Retail sales (8:00am) Dec
Times shown are local. Source: Private and public agencies and J.P. Morgan. Further details available upon request
58
Jessica Murray (44-20) 7742 6325 Global Data Watch
jessica.x.murray@jpmorgan.com December 31, 2020
Emerging Europe/Middle East/Africa economic calendar

Czech Republic: Hungary: Czech Republic: Hungary: Czech Republic:
PMI (9:30am) Dec Unemployment (9:00am) Nov Trade balance (9:00am) Nov Retail sales (9:00am) Nov GDP final (9:00am) 3Q
54.2 Hungary: NBH 1-week depo rate decision Industrial output (9:00am) Nov
Hungary: Average gross wages (9:00am) On hold: 0.75% Hungary:
PMI (9:00am) Dec Oct Poland: Industrial output (9:00am) Nov
52.4 PPI (9:00am) Nov CPI prelim (10:00am) Dec South Africa:
Poland: Nigeria: 2.5%oya Gross reserves (8:00am) Dec
PMI (9:00am) Dec PMI (8:45am) Dec Barclays PMI (11:00am) Dec
51.1
Turkey:
CPI (9:00am) Dec
14.1%oya
PMI (9:00am) Dec
Israel:
BoI rate decision (4:00pm) Jan
On hold: 0.10%

Hungary: South Africa: Czech Republic: Hungary: Russia:
Trade balance (9:00am) Nov Manufacturing output (1:00pm) CPI (9:00am) Dec CPI (9:00am) Dec Foreign trade (4:00pm) Nov
Turkey: Nov Retail sales (9:00am) Nov Serbia: Israel:
Unemployment (9:00am) Oct Current account (10:00am) Nov NBS rate decision (12:00pm) Jan CPI (2:00pm) Dec
Poland:
NBP rate decision Jan
Current account (2:00pm) Nov
Romania:
Current Account Nov
Turkey:
Current account (9:00am) Nov
Industrial output (9:00am) Nov
South Africa:
Retail sales (1:00pm) Nov
Ghana:
CPI Dec

Czech Republic: South Africa: Turkey:
PPI (9:00am) Dec CPI (10:00am) Dec CBRT rate decision (1:00pm)
Russia: South Africa:
Current account 4Q SARB rate decision Jan
Ukraine:
NBU rate decision (2:00pm) Jan

Kazakhstan: Hungary: Kenya: Hungary: Hungary:
NBK rate decision (3:00pm) Jan NBH rate decision (2:00pm) Jan CBK rate decision Jan Unemployment (9:00am) Nov Average gross wages (9:00am)
Mozambique: Zambia: Nov
CBM rate decision Jan CPI Dec South Africa:
Budget (2:00pm) Dec
Trade balance (2:00pm) Dec
59
Jisun Yang (822) 758-5512 Global Data Watch
jisun.yang@jpmorgan.com December 31, 2020
Non-Japan Asia economic calendar

China: Australia: Australia: Taiwan:
PMI Mfg. (9:45am) Dec 54.7 ANZ job advertisements (11:30am) Building approvals (11:30am) Nov Trade balance (4:00pm)
Hong Kong: Dec Trade balance (11:30am) Nov Dec US$5.3bn
Retail sales (4:30pm) Taiwan: Korea:
Nov -7.7%oya CPI (4:00pm) Dec 0.0%oya Current account balance (8:00am)
India: China: Nov US$12.0bn
PMI mfg. (10:30am) Jan FX reserve Dec US$3.21tn
Indonesia:
CPI (11:00am) Dec 1.6%oya
Korea:
PMI mfg. (9:30am) Dec 53.0
Singapore:
GDP annual (8:00am)
2020 -6.2%oya
GDP (8:00am) 4Q -5.1%oya
PMI (9:00pm) Dec 50.4
Taiwan:
PMI mfg. (8:30am) Dec 57.2
Thailand:
CPI (10:30am) Dec -0.7%oya
During the week: China: Money supply Dec (9 Jan) M2 10.4%oya

Australia: India: New Zealand: New Zealand: India:
Retail sales final (11:30am) Nov CPI (5:30pm) Dec ANZ commodity price (1:00pm) Building permits (10:45am) Dec Trade balance (5:00pm) Dec
China: IP (5:30pm) Nov Dec India: Korea:
CPI (9:30am) Dec WPI (5:30pm) Dec BOK monetary policy meeting
PPI (9:30am) Dec
During the week: China: Trade balance Dec (12-14 Jan)

China: Hong Kong: Malaysia: Australia: New Zealand:
FAI (10:00am) Dec Unemployment rate (4:30pm) Dec BNM monetary policy meeting Unemployment rate (11:30am) Dec Business NZ PMI (10:30am) Dec
GDP (10:00am) 4Q Taiwan: Hong Kong: Malaysia:
IP (10:00am) Dec Export orders (4:00pm) Dec CPI (4:30pm) Dec CPI (12:00pm) Dec
Retail sales (10:00am) Dec Taiwan:
Singapore: Unemployment rate (4:00pm) Dec
NODX (8:30am) Dec

Singapore: Hong Kong: Australia: New Zealand: Australia:
CPI (1:00pm) Dec Trade balance (4:30pm) Dec CPI (11:30am) 4Q Trade balance (10:45am) Dec PPI (11:30am) 3Q
Taiwan: Singapore: NAB business confidence Pvt. sector credit (11:30am) Dec
IP (4:00pm) Dec IP (1:00pm) Dec (11:30am) Dec Hong Kong:
GDP flash (4:30pm) 4Q
Malaysia:
Taiwan:
GDP flash (4:00pm) 4Q
Thailand:
PCI (2:30pm)
PII (2:30pm)
Holiday: India Holiday: Malaysia Budget balance (2:30pm) Dec
60
Olya Borichevska (1-212) 834-5398 Global Data Watch
December 31, 2020
Global Data Diary

Week / Weekend Monday Tuesday Wednesday Thursday Friday
2 - 8 January 4 January 5 January 6 January 7 January 8 January
Israel Germany Japan China Brazil
 BoI mtg: no chg  Retail sales (Nov)  Consumer sent (Dec)  FX reserves (Dec)  IP (Nov)
Singapore  U-rate (Dec) United States Euro area Euro area
 GDP (4Q) United States  ADP employment (Dec)  CPI (Dec)  U-rate (Nov)
Turkey  ISM mfg (Dec)  Factory orders (Nov)  EC cons conf (Dec, fnl) Germany
 CPI (Dec)  Light vehicle sls (Dec)  FOMC minutes  Retail sales (Nov)  IP (Nov)
Mexico  Trade balance (Nov)
Global Global  CPI (Dec) Japan
 Mfg PMI (Dec)  All-industry PMI (Dec) United States  CAI (Nov)
 Trade balance (Nov) Taiwan
 Trade balance (Dec)
United States
 Labor mrkt report (Dec)
 Wholesale trade (Nov)
9 - 15 January 11 January 12 January 13 January 14 January 15 January

China China Brazil Euro area Japan Euro area
 Money supply (Dec)  CPI (Dec)  CPI (Dec)  IP (Nov)  Machinery orders (Nov)  Trade balance (Nov)
Mexico India Poland Peru Korea
 IP (Nov)  CPI (Dec)  NBP mtg: no chg  BCRP mtg: no chg  BOK mtg: no chg
 IP (Nov) Turkey United States United Kingdom
Japan  IP (Nov)  Import prices (Dec)  IP (Nov)
 Econ wtchrs srvy (Dec) United States  Trade balance (Nov)
United States  CPI (Dec) United States
 JOLTS (Nov)  Empire St srvy (Jan)
 NFIB srvy (Dec)  PPI (Dec)
 Retail sales (Dec)
 IP (Dec)
 UMich cons snt (Jan, prl)
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Olya Borichevska (1-212) 834-5398 Global Data Diary
December 31, 2020
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Olya Borichevska (1-212) 834-5398 Global Data Watch
December 31, 2020
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Correction: To correct a typographical error that misstated the revision to the Korea growth forecast in the lead essay.
"Other Disclosures" last revised November 28, 2020.

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Economic Research

December 31, 2020

Global Data Watch

Brexit has exited the building 100

LATAM lockdown threshold remains high

Global economic outlook summary

G-3 economic outlook detail

Global Central Bank Watch

as a surge in holiday-season COVID-19 cases is expected to

Figure 4: Global real GDP, 4Q20 JPM forecast 0

4 Figure 8: Latam real GDP, 4Q20 JPM forecast

Selected recent research from

passed. But the passed legislation brings stimulus a couple of

A deal finally sealed While 5% growth is a strong quarterly average, we should

Data releases and forecasts Tue ISM manufacturing survey

Wed Markit services PMI Thu International trade

Fri Labor-market report Given that the COVID-19-related developments could be

Consumer confidence Durable goods (Dec 23)

Business inventories (adv.)

Pending home sales

Data releases and forecasts Manufacturing orders

Financial activity and public finance Oct Nov Dec

Review of past week’s data

National business surveys

under control. We expect consumption to remain depressed

Wed Consumer sentiment

Labor force survey (Dec 25)

While the renewed measures clearly will exert a drag, we be-

Data releases and forecasts Building permits

Thu International trade

Thu Ivey PMI

Fri Labor force survey

Review of past week’s data

Against this backdrop, we are holding on to our pessimistic

Mon IMEF PMI survey

Thu Consumer prices

Fri Consumer confidence, INEGI

Core IPCA-15 stabilized in December, de-

We have been arguing for a while now that the effects of

the monetary overhang. In fact, we expect the BCRA mone-

designing a mechanism for dispute resolution the two sides

Mon Money supply Permanent placements 56.0 48.8 48.2

appreciation goes beyond economic fundamentals the BOI is

Wed External trade Poland:

Service balance 1435 1435 650 805 __ 1455 Turkey:

Real GDP, final

Balance of payments, final

Source: Rosstat, MinFin, AEB Russia, Markit, J.P. Morgan forecasts

SAMA’s international reserves were unchanged in 3Q after a

Data releases and forecasts

Fri Consumer prices

Review of past week’s data

SAMA net foreign assets

Source: CBE, MoPE, GASTAT, SAMA, Markit, J.P. Morgan forecasts

Housing turning up in some pockets

COVID restrictions. Excluding Victoria, sales posted a still- -20

such supply suggests November’s drop is likely to prove tem-

Figure 2: Australian trade balance

Thu Building approvals

Fri Trade balance

Review of prior week’s data

No data releases of note.

Review of prior week’s data

Source: ABS, Stats NZ, J.P. Morgan forecast