China only big economy to see growth
China’s GDP rose by 2.3% in 2020, according to new official data, making it the only major global economy to expand during the coronavirus pandemic. Recovery was led by growth in demand for exports, with fourth-quarter economic activity expanding 6.5% year-over-year, and the country returned to work after infections were largely controlled toward the end of the year. Economists note that the country did not escape challenges, with domestic consumption falling 4% in 2020 and unemployment in urban areas at 5.2%. The official figures exceeded economist expectations for 2020 growth. Economists currently forecast China’s GDP will climb by 8.2% this year, per Bloomberg. 💲 Here’s what people are saying.
- China overtook the U.S. as the world’s top destination for new foreign direct investment in 2020, according to United Nations figures released today, after the U.S. held the top spot for decades. New investments by overseas businesses into the U.S. slumped by 49% last year.
- Vietnam’s factories boom amid crisis: Vietnam will continue to shine as an alternative manufacturing hub to China and India, according to a report from Economist Group. Despite the pandemic, Vietnam’s GDP grew by 2.9% in 2020 — one of the world’s highest rates — due to the manufacturing rush.
Banks doing better than expected
Bank of America and Goldman Sachs became the latest U.S. lenders to beat analyst expectations for fourth-quarter profits to cap a rocky year. Many big banks — often considered an economic bellwether — received a boost from releasing loan loss provisions, with JPMorgan Chase closing out 2020 with a record-breaking profit of $12.1 billion. Citigroup also beat estimates as profit fell to $4.63 billion. Despite a strong showing from JPMorgan, CEO Jamie Dimon said the bank is still bracing for “significant near-term economic uncertainty.”
Monzo boss exits over mental health
Monzo founder Tom Blomfield is set to leave the UK challenger bank amid increasing pressure on his mental wellbeing. Last year, Blomfield moved from chief executive to the newly created role of president and resigned from Monzo’s board. But the 35-year-old will leave the bank entirely at the end of the month, after admitting that as well as being unhappy when the company scaled beyond a “scrappy start-up,” the pandemic and lockdowns have exacerbated pressures on his mental health. Founded in 2015, the fintech firm now has almost 5 million customers.
Miami heats up for VC
Miami’s push to become the next tech hub is heating up, with Mayor Francis Suarez intensifying his pitch to venture capital and tech executives in recent weeks. Suarez even mentioned building traffic-easing tunnels under Miami to Tesla CEO Elon Musk, to which Musk responded, “We will do it.” But one former tech executive who now lives in Miami told Bloomberg the hype “is a little bit ahead” of where it should be. Miami attracted less than 1% of 2020 U.S. venture dollars through mid-December, according to researcher PitchBook, which Suarez brushed off as “plenty of room to grow.” 💲 Here’s what people are saying.
Retirement funds largely left intact
Despite a rocky economic climate, fewer Americans than expected withdrew money from their retirement accounts at the end of last year, new figures suggest. Congress allowed people to pull up to $100,000 from individual retirement accounts or 401(k)-type plans without the early-withdrawal penalty, but just 6.3% of those eligible took money out in 2020, according to Fidelity Investments, with Vanguard and T. Rowe Price Group reporting similar figures. Why? The crisis hit lower-income workers hardest, many of whom don’t even have access to a retirement-savings plan, noted economists.
Behind India’s stock market rush
New Indian investors are entering the stock market thick and fast. Official data shows nearly 10 million investors made their stock market debut in 2020, more than double compared to the previous year. Who’s driving this rush? Millennials. “We have witnessed record demat account opening by millennials in 2020,” Nithin Kamath, the founder of Zerodha, told The Economic Times. The key enabler is technology, whether it’s opening a demat account or carrying out trades on mobile devices. The share of mobile-phone trading in the country has soared by 8-12 times in the past five years.
Cashless rise ‘risk to vulnerable’
More than a third of people in the UK say they have been unable to pay with cash at least once since March, suggesting cash refusal is “creeping into the wider economy,” according to the consumer group Which. The company said the trend risks excluding vulnerable people who rely on cash and those without access to electronic payment, and it called on the government to legislate to protect cash. Transport for London dropped plans to make all stations cashless after campaign groups raised concerns over accessibility.
The new Roaring ’20s? Just maybe
Are the 2020s really the new Roaring Twenties? Heartened by the introduction of a vaccine that will soon see people dining out and traveling once more, as well as a host of economy-driving new technologies, positivists point to a new period of economic dynamism. But, muses Medium’s Steve LeVine, is this just collective wishful thinking? The World Bank forecasts the 2020s are likely to be “a lost decade” of limp economic growth — while others caution that the Roaring 1920s ended blighted by seething resentment surrounding wealth inequality