With the US presidential election in the past, COVID-19 on both sides of the Atlantic are coming back more quickly to increase transitions and will weigh on major economies in the near term, warns Goldman Sachs.
Supporters of former economist Joe Biden celebrated an election victory early Saturday by the Associated Press and other news organizations, with a team led by chief economist Jan Hatzius slowing growth forecasts in a note to clients on Saturday.
Hetzius said Biden would likely work with a Republican majority in the Senate and compromise for a $ 1 trillion stimulus package, with the bank hoping to retain half of the bank if Democrats were able to claim the Senate while retaining control Would have paid less. the house of Representatives
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“A small positive fiscal stimulus should be enough for US growth in the coming quarters,” he said. But it is still troubling the near-term and, therefore, the latest decline by Goldman.
The team lowered its first-quarter US growth forecast from 7% to 3.5%, and dramatically reduced Europe’s fourth-quarter estimate from a 9.1% increase to a contraction of 8.7%. Hetzius and team said, “If the news of the virus continues to worsen, the risk is reduced.”
Fresh lockdowns announced across Europe in recent weeks are an important reason behind deep cuts to the region’s near-term development outlook. And while US states and municipalities have not announced strict restrictions on the movement, beyond the multi-quarantine of people traveling from certain states to others, economists have made possible changes to that forecast.
The news of the virus has been overcome by a long and bitter election in the US, with even the country reporting about 133,000 infections on Friday, a third straight record single-day affair. Axion first reported that Biden was set to announce a new COVID-19 task force on Monday.
Europe has seen notable hospitality in the Czech Republic and Belgium. When adjusted for population, data show individuals are being hospitalized with the virus at a higher level in Europe than in the US, which the New York Times also recently reported.
But for the long term, Hetzius and the team say their forecasts are much more upbeat than others.
They hope that “when European lockdown is over and the vaccine becomes available, very strong growth will be given way.” After declining near-term growth, Goldman’s 2021 global forecast is now 6%, still above the consensus of 5.2%, but a drop of half a point from where the bank stood a month ago.
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The team is specifically seeking the Food and Drug Administration to approve at least one vaccine by January and then mass vaccination of the general US population to begin thereafter. The Goldman team said that should lead to a faster growth, or a V-shaped recovery in the second quarter, which has a “V” vaccine.
“An important assumption underlying our forecast is that governments in countries suffering from coronovirus infections will continue to do a fair amount of lost private sector income due to disruptions through salary subsidies, enhanced unemployment benefits and other income transfers. Takes place, ”said Hetzius and the team.
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Elsewhere, they hold mostly above-consensus estimates for emerging countries in 2021–22, except for China, where production has already returned to pre-epidemic levels.