NEW YORK: Moody’s Investors Service has said that high-frequency alternative data indicates a strong rebound in economic activity even as infection rates rise and restrictive measures remain in place across many countries. New infections are spiking again across 13 of the G-20 countries.
Nevertheless, the number of fatalities has decreased in recent weeks as vaccinations gather pace. The United Kingdom and the United States lead in vaccinations among the G-20 countries, said Moody’s in a sector in-depth report released on Thursday (local time). Pent-up demand is driving a rebound in economic activity even as restrictive measures remain in place across many countries. US household spending has risen above pre-Covid levels across all income groups, driven by retail, apparel and general merchandise spending. The latest high-frequency data suggests a strong rebound in trade activity across G-20 countries. Industrial production and manufacturing data support a continued, although uneven supply-side recovery.
Financial conditions remain supportive in the US and Euro area, and they continue to improve in the UK. In contrast, the financial conditions recovery in emerging markets has stalled with conditions tightening in China, Brazil, Turkey and Argentina. The latest retail sales data suggests a slower pace of contraction in Germany and the UK, and strong growth in the US, Australia and South Korea. Retail sales increased in Japan, reversing a contraction in January. Moody’s said mobility data indicates that while workplace visits have slowed, consumer retail, recreation and park visits have increased across most countries. Time spent at home has decreased.
Use of public transport remains below January 2020 levels, except in Japan and France. In contrast, the overall recovery in emerging market financial conditions has stalled.
Conditions remain tighter than historical averages, highlighting vulnerabilities to market volatility and capital outflows as the gap in the recovery between advanced and emerging markets widens this year.
