An interesting insight from Valentina Tacchino, Head of International at one of our partners LGT Vestra, UK.

Happy Year of the Ox! This is a very special year for LGT, as we are celebrating 100 successful years since we were founded. As Chinese New Year celebrations this year are curbed by current restrictions, we hope for a return to normal celebrations in the future. In the wake of this crisis, we hope to have reinforced our grit and determination. We wish you and your families much happiness and, above all, good health and resilience in the Year of the Ox.

In the Chinese zodiac, The Year of the Ox symbolises hard work, reliability and determination.

A year has passed since COVID-19 was discovered in Wuhan, China. In 2020, Massachusetts Institute of Technology published a paper entitled “Pandemics Depress the Economy, Public Health Interventions Do Not”.[1] Examining America’s response to the 1918 influenza pandemic, they concluded that cities that acted early and forcefully had the best economic outcomes. By imposing strict controls, these cities were able to limit the damage to public health and ultimately bounced back quicker. Meanwhile, those that delayed such measures could not escape the pandemic’s shadow.

Drawing parallels with COVID-19, the Chinese Government’s early and decisive action was key, demonstrated by China’s economic performance. According to The World Bank estimates, China’s GDP expanded at an annual rate of 2.3% in 2020 as a whole. [2] It is China’s weakest growth rate since 1976, the final year of the Cultural Revolution. More impressive yet is China’s momentum. In the fourth quarter of 2020, growth accelerated to 6.5% year-on-year, faster than its pre-COVID-19 rate. By contrast, the global economy declined by 4.3%. As we move away from the tumultuous Year of the Rat, we consider what the Year of the Ox may have in stock, after so much uncertainty in 2020.

Hard work

We are cautiously optimistic that the end is now in sight. Vaccines that fight off the infection have been developed and approved in record time. The UK became the first country to start inoculating people on 8 December 2020. Others have swiftly followed suit and now more than 50 countries have active vaccination programmes.[3] Collectively, they have given over 50 million inoculations to residents. The US, China, the UK and Israel are the countries where vaccinations are advancing more rapidly, underpinning their determination to deliver a long-term solution.

Reliability

In the UK, uncertainty dominated 2020 – with the pandemic, economic growth deceleration and impending Brexit with a potential ‘no deal’. However, now the UK shows signs of improvement: a Brexit deal was reached on 24 December 2020 allowing for free flow of trade (but with more paperwork) and 18% of the UK population have received the first dose of the vaccine.[4] The Bank of England expects a powerful rebound later this year as household savings have increased and consumers are eager to spend these savings to enjoy leisure activities.[5]

In the US, following the unpredictable Trump presidency, the Biden administration has clearly indicated its key priorities: the pandemic, climate change and seeking unity.

Determination

While 2020 will have a lasting impact on us all, as a business we are proud to have continued operating effectively and serving our clients at the high standard towards which we strive. We are hopeful that the vaccination roll-out will pave the way for a return to normality and allow a greater degree of international mobility for our clients and society.

[1] Correia, Sergio and Luck, Stephan and Verner, Emil, Pandemics Depress the Economy, Public Health Interventions Do Not: Evidence from the 1918 Flu (June 5, 2020). Available at SSRN: https://ssrn.com/abstract=3561560 or http://dx.doi.org/10.2139/ssrn.3561560

[2] National Bureau of Statistics, 18 Jan 2021

[3] Max Roser, Hannah Ritchie, Esteban Ortiz-Ospina and Joe Hasell (2020) – “Coronavirus Pandemic (COVID-19)”. Published online at OurWorldInData.org. 8 Feb 2021

[4] Public Health England, 8 Feb 2021

[5] Bank of England, Minutes of the Monetary Policy Committee meeting ending on 3 February 2021