We from TextileFuture would like to demonstrate that we do not only use material from one source only, thus we present today the “EU Autumn 2020 Economic Forecast”, therefore an economic important item, with the possibility to load down the entire report.
The second item derives from an original Chinese site and is entitled “China unveils blueprint to become global leader in innovation”. It gives you an direct impression of the Chinese vision.
The third feature is entitled “How China’s Urban Millennials and Gen Z Live and Spend” and is based upon a statistical report from Euromonitor International and gives new new insight on the growing Chinese population segment and their spending attitudes.
We wish you interesting reading. Keep safe and healthy!
EU Autumn 2020 Economic Forecast – Rebound interrupted as resurgence of pandemic deepens uncertainty
The coronavirus pandemic represents a very large shock for the global and EU economies, with very severe economic and social consequences. Economic activity in Europe suffered a severe shock in the first half of the year and rebounded strongly in the third quarter as containment measures were gradually lifted. However, the resurgence of the pandemic in recent weeks is resulting in disruptions as national authorities introduce new public health measures to limit its spread. The epidemiological situation means that growth projections over the forecast horizon are subject to an extremely high degree of uncertainty and risks.
An interrupted and incomplete recovery
The Autumn 2020 Economic Forecast projects that the euro area economy will contract by 7.8 % in 2020 before growing 4.2 % in 2021 and 3 % in 2022. The forecast projects that the EU economy will contract by 7.4% in 2020 before recovering with growth of 4.1 % in 2021 and 3 % in 2022. Compared to the Summer 2020 Economic Forecast, growth projections for both the euro area and the EU are slightly higher for 2020 and lower for 2021. Output in both the euro area and the EU is not expected to recover its pre-pandemic level in 2022.
The economic impact of the pandemic has differed widely across the EU and the same is true of recovery prospects. This reflects the spread of the virus, the stringency of public health measures taken to contain it, the sectoral composition of national economies and the strength of national policy responses.
Rise in unemployment contained compared to drop in economic activity
Job losses and the rise in unemployment have put severe strains on the livelihoods of many Europeans. Policy measures taken by Member States, together with initiatives at EU level have helped to cushion the impact of the pandemic on labour markets. The unprecedented scope of measures taken, particularly through short-time work schemes, have allowed the rise in the unemployment rate to remain muted compared to the drop in economic activity. Unemployment is set to continue rising in 2021 as Member States phase out emergency support measures and new people enter the labour market, but should improve in 2022 as the economy continues to recover.
The forecast projects the unemployment rate in the euro area to rise from 7.5 % in 2019 to 8.3 % in 2020 and 9.4 % in 2021, before declining to 8.9 % in 2022. The unemployment rate in the EU is forecast to rise from 6.7 % in 2019 to 7.7 % in 2020 and 8.6 % in 2021, before declining to 8.0 % in 2022.
Deficits and public debt set to rise
The increase in government deficits is expected to be very significant across the EU this year as social spending rises and tax revenues fall, both as a result of the exceptional policy actions designed to support the economy and the effect of automatic stabilisers.
The forecast projects the aggregate government deficit of the euro area to increase from 0.6 % of GDP in 2019 to around 8.8 % in 2020, before decreasing to 6.4 % in 2021 and 4.7 % in 2022. This reflects the expected phasing out of emergency support measures in the course of 2021 as the economic situation improves.
Mirroring the spike in deficits, the forecast projects the aggregate euro area debt-to-GDP ratio will increase from 85.9 % of GDP in 2019 to 101.7 % in 2020, 102.3 % in 2021 and 102.6 % in 2022.
Inflation remains subdued
A steep fall in energy prices pushed headline inflation into negative territory in August and September. Core inflation, which includes all items except energy and unprocessed food, also fell substantially over the summer due to lower demand for services, especially tourism-related services and industrial goods. Weak demand, labour market slack and a strong euro exchange rate will exert downward pressure on prices.
Inflation in the euro area, as measured by the Harmonised Index of Consumer Prices (HICP), is forecast to average 0.3 % in 2020, before rising to 1.1 % in 2021 and 1.3 % in 2022, as oil prices stabilise. For the EU, inflation is forecast at 0.7 % in 2020, 1.3 % in 2021 and 1.5 % in 2022.
Members of the College said:
Valdis Dombrovskis, Executive Vice-President for an Economy that Works for People, said: “This forecast comes as a second wave of the pandemic is unleashing yet more uncertainty and dashing our hopes for a quick rebound. EU economic output will not return to pre-pandemic levels by 2022. But through this turbulence, we have shown resolve and solidarity. We have agreed unprecedented measures to help people and companies. We will work together to chart the course to recovery, using every tool at our disposal. We agreed a landmark recovery package, NextGenerationEU – with the Recovery and Resilience Facility at its heart – to provide massive support to worst-hit regions and sectors. I now call again on the European Parliament and Council to wrap up negotiations quickly for money to start flowing in 2021 so that we can invest, reform and rebuild together.”
Paolo Gentiloni, Commissioner for Economy, said: “After the deepest recession in EU history in the first half of this year and a very strong upswing in the summer, Europe’s rebound has been interrupted due to the resurgence in COVID-19 cases. Growth will return in 2021 but it will be two years until the European economy comes close to regaining its pre-pandemic level. In the current context of very high uncertainty, national economic and fiscal policies must remain supportive, while NextGenerationEU must be finalised this year and effectively rolled out in the first half of 2021.”
A high degree of uncertainty with downside risks to the outlook
Uncertainties and risks surrounding the Autumn 2020 Economic Forecast remain exceptionally large. The principal risk stems from a worsening of the pandemic, requiring more stringent public health measures and leading to a more severe and longer lasting impact on the economy. This has motivated a scenario analysis for two alternative paths of the pandemic evolution – a more benign one and a downside one – and its economic impact. There is also a risk that the scars left by the pandemic on the economy – such as bankruptcies, long-term unemployment and supply disruptions – could be deeper and farther reaching. The European economy could also be impacted negatively if the global economy and world trade improved less than forecast or if trade tensions were to increase. The possibility of financial market stress is another downside risk.
On the upside, NextGenerationEU, the EU’s economic recovery programme, including the Recovery and Resilience Facility, is likely to provide a stronger boost to the EU economy than projected. This is because the forecast could only partially incorporate the likely benefits of these initiatives, as the information available at this stage on national plans is still limited. A trade agreement between the EU and the UK would also have a positive impact on the EU economy from 2021 compared to the forecast baseline of the UK and EU trading based on WTO Most Favoured Nation (MFN) rules.
The forecast was prepared in a context of severe uncertainty, with Member States announcing major new public health measures in the second half of October 2020 to limit the spread of the virus.
The forecast is based on the usual set of technical assumptions concerning exchange rates, interest rates and commodity prices, with a cut-off date of 22 October 2020. For all other incoming data, including information on government policies, this forecast takes into consideration information up until and including October 22, 2020. Unless policies are credibly announced and specified in adequate detail, the projections assume no policy changes.
The forecast hinges upon two important technical assumptions. First, public health measures are assumed to remain in force to some degree throughout the forecast horizon. However, after their significant tightening in the fourth quarter of 2020, the stringency of the measures is expected to gradually ease in 2021. It is also assumed that the economic impact of a given level of restrictions will diminish over time as the health system and economic agents adapt to the coronavirus environment. Second, given that the future relations between the EU and the UK are not yet clear, projections for 2021 and 2022 are based on a technical assumption that the EU and the UK will trade on WTO Most Favoured Nation (MFN) rules from 1 January 2021 onwards. This is for forecasting purposes only and reflects no anticipation nor prediction as regards the outcome of the negotiations between the EU and the UK on their future relationship.
The European Commission’s next forecast will be an update of GDP and inflation projections in the Winter 2021 Economic Forecast, which is expected to be presented in February 2021.
Full document: Autumn 2020 Economic Forecast
China unveils blueprint to become global leader in innovation
China has outlined priority areas and measures for turning the world’s second largest economy into a global innovation leader over the next 15 years, vowing to make major breakthroughs in key and core technologies.
The country will pursue innovation-driven development and implement a number of strategic projects in the fields of artificial intelligence, quantum information, integrated circuits, life and health, brain science, breeding, aerospace science and technology, and deep Earth and ocean exploration, according to the full text of the Communist Party of China (CPC) Central Committee’s development proposals made public November 3, 2020.
The document, the Party leadership’s proposals for formulating the 14th Five-Year Plan (2021-2025, FYP) for National Economic and Social Development and the Long-Range Objectives Through the Year 2035, was adopted at the fifth plenary session of the 19th CPC Central Committee which closed on October 29.
Self-reliance in science and technology
In an explanatory speech on the proposals, Xi Jinping, general secretary of the CPC Central Committee, stressed that China should focus on promoting high-quality development during its 14th FYP period.
To this end, China vows to uphold the central role of innovation in its modernization drive and take self-reliance in science and technology as strategic underpinning for national development, according to the proposals.
China will improve the national innovation system and speed up efforts to build the country into a scientific and technological powerhouse, the document said.
“On the one hand, we will improve our capabilities in independent innovation because key and core technologies cannot be bought,” Wang Zhigang, minister of science and technology, said at a press conference last Friday, October 30, 2020.
“On the other hand, we also hope to learn more advanced experience from other countries while sharing with the world more scientific and technological achievements of China and contributing more ‘Chinese wisdom’ for tackling global challenges,” Wang added.
The document underscored the “dominant role” of enterprises in innovation, vowing to enhance their innovation capacity.
China will promote the building of national laboratories, plan and develop national science centers and regional innovation centers, and support the formation of international science and technology innovation centers in Beijing, Shanghai, and the Guangdong-Hong Kong-Macao Greater Bay Area, the proposals said.
Strategic emerging industries and green development
The document also identified a number of “strategic emerging industries” and pledged to speed up the development of these industries, including new-generation information technology, biotechnology, new energy, new materials, high-end equipment, new energy vehicles, environmental protection, aerospace, and marine equipment.
The proposals called for the deep integration of internet, big data and artificial intelligence with other industries, facilitating the cluster development of advanced manufacturing, building a series of strategic emerging industries as new growth drivers, and nurturing new technologies, new products, new business models and new business forms.
Meanwhile, China will introduce a series of measures to facilitate the overall green transformation of economic and social development, said the document.
China will reduce its carbon intensity, or the amount of carbon emissions per unit of GDP, and make an action plan to achieve the goal of having CO2 emissions peak before 2030.
The pledge is part of China’s efforts to promote green development and a global green revolution in the post-COVID era.
Chinese President Xi Jinping in September said that the country aims to achieve carbon neutrality by 2060.
“COVID-19 reminds us that humankind should launch a green revolution and move faster to create a green way of development and life,” Xi said in an address delivered via video link to the General Debate of the 75th session of the United Nations General Assembly.
He urged all countries to “take decisive steps” to honor the 2015 Paris Agreement on climate change and pledged that China will “have CO2 emissions peak before 2030 and achieve carbon neutrality before 2060.”
‘Victory in sight’ for achieving ‘xiaokang’ goal
China has attained “decisive achievements” in securing a victory in building a moderately prosperous (known as “xiaokang” in Chinese) society in all respects, according to the document, which said “a victory is in sight” for accomplishing the goal.
In his explanatory speech, Xi said the CPC Central Committee will carry out systematic assessment and review of the building of a moderately prosperous society in all respects in the first half of 2021 before officially announcing the achievement of moderate prosperity throughout the society.
It remains the Party’s firm commitment to the people to comprehensively build a moderately prosperous society of a higher level for the benefit of more than 1 billion people by the time the CPC marks its 100th founding anniversary next year, he stressed.
The proposals also elaborated on China’s decision to establish a new development pattern where domestic and foreign markets can boost each other with the domestic market as the mainstay, while pledging to continue to enhance the level of opening-up.
Support will be given to the Hong Kong and Macao special administrative regions in enhancing their competitive edges and integrating their own development into the overall development of the country, said the document.
How China’s Urban Millennials and Gen Z Live and Spend
Much of the information in this briefing is of a statistical nature and while every attempt, has been made to ensure accuracy and reliability, Euromonitor International cannot be held responsible for omission or errors.
Figures in tables and analyses are calculated from unrounded data and may not sum. Analyses found in the briefing may not totally reflect the companies’ opinions, reader discretion is advised.
Understanding urban millennialsand Gen Z: Opportunities they offer
In 2019, millennials (born between 1980 and 1994) and Generation Z (born between 1995 and 2009) accounted for almost 40 % of the population in China. The proportion of the population living in urban areas reached around 60 % in 2019, and is projected to reach 65 % by 2025. The demographic landscape and population trends have put a specific segment in the spotlight –urban millennials and Generation Z, which together represent one of the most critical forces shaping the outlook for the Chinese consumer market, as their attitudes towards digital convenience, shopping preferences and lifestyles aredriving the growth of the relevant sectors and providing new market opportunities.
Urban millennials and Generation Z were born and / or live in a different socioeconomic environment than their parents and to previous generations, with significant opportunities to benefit from the economic growth of China. Their distinctive features include a strong attachment to smartphones, a willingness to pay extra for premium or smart products, pride in domestic brands, a preparedness to make thorough searches for high-quality products for babies and pets, in particular, and a willingness to spend on self-entertainment activities.
In order to help local and global businesses understand Chinese urban millennials and Generation Z, and seize the market opportunities they offer, this report is divided into three themes and eight relevant trends, profiling this distinctive and important consumer segment:
- Theme 1 –Ubiquitous Digital Convenience: Living on Smartphones, Keeping Up with Influencers, Comfort and Convenience in the Home.
- Theme 2–Developing Shopping Preferences: Premiumisation: A Tale of Two Groups, Redefined “Made in China”.
- Theme 3–Modern Urban Life: Pets as Family, Advanced Parenting, Self-Entertainment.
The impacts of COVID-19 on each theme and the implications for business will also be discussed.
Chinese urban millennials and Generation Z are experts in smartphone and internet use to achieve convenience in their daily lives, which can be referred to as “digital convenience”. Regular activities amongst this consumer segment, such as managing their daily routines and seeking shopping advice, are seeing digital devices play an increasingly central role.
Surge in mobile payment leads to significant reliance on smartphones.
M-commercerefers topayment transactions conducted via a mobile device. Purchase transaction examples include ring tones, apps, SMS payments, NFC and e-commerce activity using a mobile phone. P2P money transfer and payment transactions utilising a laptop or desktop computer are excluded.
- The rapid growth in m-commerce was supported by the development of mobile communications. Efficient infrastructureconstruction enables rapid network upgrades offering higher speeds and better quality.
- The mobile payment pioneers, in particular Alipayand WeChat, have contributed strongly to growth by offering consumers unprecedented convenience.
Diversified mobile applications satisfy daily needs and drive smartphone usage.
- The rise in mobile data traffic is being driven by longer hours of use and more diverse applications. Mobile app functions are covering more aspects of life, especially so-called “super apps”, such as WeChat, Alipay and Taobao, which are improving the user experience.
- Appsare becoming more diversified to enhance user appeal. Videos account for a quarter of mobile app sessions. An increasing number of short video platforms entertain consumers with user-generated content and precisely targeted recommendations.
- Brands are keen to interact with consumers through smartphones. They take advantage of the super apps by developing official accounts and mini-apps. Also, they are active on short video and live-streaming platforms to increase exposure and achieve purchase conversion.
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