China … its all in the tone!
Gross Domestic Product (GDP) is a measure of all that is produced and all that is earned and spent in the economy. A recession is defined as 2 periods of negative GDP growth. In Australia we were in one and now we are out! Between December and March we fell 0.3%. Between March and June we fell 7%. Between June and September the GDP grew by 3.3%. Offficially this is the end of the recession. The recovery was the most significant in 5 decades.
Feeling any better about life? Probably not – as we are only 40% of the way back to pre-covid levels. Most of the growth came from consumer spending which recovered by 8% after falling 12.5% in the previous quarter. It recovered in areas that suffered during lockdowns. People funded the spending with savings which had risen during the lockdown.
Of course, most of the recovery in spending is based on JobKeeper and JobSeeker payments.
Exports suffered during the quarter, which is set to continue because of the souring relations with China. What a week it has been in China news. The Prime Minister has engaged with a tweet in a fashion unbecoming a leader of Australia. Have we forgotten that at every opportunity we have goaded China over its treatment of (to name a few) the Taiwanese, Uyghurs, Hong Kongers and the treatment of those protesting Tienanmen Square. It beggars belief that we are reacting in the fashion we are. We all know relationship breakdowns are never one sided but Australia has certainly painted itself into a corner – and continues to do so.
Adding fuel to the fire is the fact that the China-Australia Free Trade Agreement (ChAfta) is up for a five-year review currently, having been signed in December 2015. Tensions have increased over the last seven months. The major reason cited by China is the call for an enquiry into the outbreak of the pandemic. America called this the China flu and China believes America influenced Australia to call for the WHO probe into the origins of the coronavirus.
Interestingly, the American CDC (Centre for Disease Control and Prevention) now says that blood samples taken in nine American states (before cases were reported in Wuhan tested positive) for antibodies for the coronavirus. Results therefore indicate that infections might have happened in the western US earlier before the Wuhan outbreak. Recall that the Military World Games occurred from October 18–27, 2019 in Wuhan, Hubei, China.
All of this indicates that patient zero was probably not from China – although finding the first case is like finding a needle in a haystack. Either way it feels like we have been hoodwinked by the President of the US into acting as his sheriff and walking into a Chinese economic trap. Bugger.
Vaccine – it’s really happening
The UK government has accepted the recommendation from the independent Medicines and Healthcare products Regulatory Agency (MHRA) to approve Pfizer/BioNTech’s COVID-19 vaccine for use. This follows months of rigorous clinical trials and a thorough analysis of the data by experts at the MHRA who have concluded that the vaccine has met its strict standards of safety, quality and effectiveness.
The Joint Committee on Vaccinations and Immunisations (JCVI) will shortly publish its final advice for the priority groups to receive the vaccine, including care home residents, health and care staff, the elderly and the clinically extremely vulnerable.
The vaccine will be made available across the UK from next week. Imagine the implications for regulators if this vaccine has negative side effects.
Either way, we are fast approaching a world returning to “normal”. Perhaps this is the shot in the arm which brings medium-term confidence to businesses and consumers which will prevent future lockdowns, business closures and job losses. It will be interesting to see how long our lockdown habits take to change – if at all.