Tensions and disputes between the U.S. and China are likely to continue, possibly resulting in further sanctions. We focus on lessons learned from the U.S. sanctions policy towards Russia, and what those could mean for U.S. sanctions towards Hong Kong or China. 

The PBoC halted its emergency easing as early as April, but continued to support the economy via fund-for-lending schemes and subsidies to bank loans. This note summarizes PBoC actions this year, with particular attention to the emergency funding schemes.

COVID-19 has exacerbated regional labor market vulnerability, and lockdowns have worsened the deterioration in employment conditions. Uneven losses across formal and informal sectors suggest declining job quality. Slow post-lockdown job growth raises fears of a jobless recovery in some countries. 

Lebanon’s political, economic and financial situation is highly uncertain. Absent real reforms, Lebanon's economic trajectory seems headed toward that of a “failed state.” Carrying out reforms could lead to an agreement with the IMF and unlock financial support from the international community.
 

China's core CPI stayed at 0.5% in the past five consecutive months. This note investigates the drivers of China's inflation. We find that the output gap was the main culprit of disinflation in 1H due to the COVID-19 lockdown. Low oil prices and RMB appreciation further depressed domestic prices. 

Foreign investor interest in Sub-Saharan Africa has picked up in recent months. This is partially due to a marked shift to risk-on sentiment in financial markets. Countries from the region are now gradually returning to the Eurobond market. Still, the outlook for deficit financing and flows to local markets remains uncertain.

We expect Brent oil prices to average $47/b in 2021, but upside risks are significant. Low interest rates, a weaker US$, tighter supply, and strong demand from East Asia are boosting non-fuel commodity prices. 

Activity has bounced back strongly following a sharp contraction in 2020Q2. The impact of political turmoil on the economy has been modest, and nonresident flows into government debt have remained stable. Uncertainty ahead of the April 2021 general election is the main risk to the growth outlook. 

Currently, the digital RMB (DCEP) is designed to be strictly cash-like with no interest payment and distributed by commercial banks to minimize the risk of disintermediation. Its impacts on banks, monetary policy, and RMB globalization depend on how the design will evolve. 
 

Despite Biden’s election, the future of the nuclear deal (JCPOA) remains uncertain due to hardliner resistance in Iran and a divided US Congress. Failure to renegotiate the deal would likely keep the economy fragile. On the other hand, Iran’s economic potential is high if U.S. sanctions are lifted.