China: Putting the tiger on a stronger footing in 2022

The Chinese economy is experiencing a difficult start to 2022, driven by renewed Covid-19 outbreaks. Even if the sanitary context eases, private consumption is likely to remain below the pre-pandemic trend level in 2022.

The flailing domestic leg should be supported by further policy rate cuts, public investment in infrastructure and temporarily laxer regulation. The external leg should remain robust. All this should bring the Chinese economy to a stronger footing in H2 2022. Beyond that, achieving “common prosperity” could imply a volatile medium-term growth pattern, depending on how policies are implemented and communicated.

Can 5G reignite the smartphone industry?

The rollout of 5G won’t be enough to kickstart a new era of “peak smartphone” in North America and Western Europe. China’s experience shows that users appreciate 5G, but will not rush for it.

European Central Bank: Last dove standing?

Despite large inflation upside surprises since the last policy meeting, with the January HICP release registering the largest upside surprise ever, we think the ECB will maintain its monetary policy stance—for now. Supply-side effects, especially energy prices, are still the key inflation drivers while second-round effects—inflation expectations and wage growth—remain moderate.