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Home / Business / Goldman Sachs cuts growth forecasts for the US and Europe, citing concerns about COVID-19’s winter spread.

Goldman Sachs cuts growth forecasts for the US and Europe, citing concerns about COVID-19’s winter spread.



A discarded mask sits on fallen autumn leaves in Berlin’s Kreuzberg district on November 7, 2020 amid the new coronavirus pandemic (Covid-19).

David gannon / Agence France-Presse / Getty Images

According to Goldman Sachs, with the US presidential election in the past, the rise of COVID-19 on both sides of the Atlantic is returning stronger and will affect major economies in the near future.

A group led by chief economist Jan Hatzius cut its growth forecast in a client note on Saturday, as supporters of former Vice President Joe Biden celebrate their anticipated election victory. early Saturday by The Associated Press and other news organizations.

Hatzius said Biden is likely to work with a Republican majority in the Senate and settle for a $ 1 trillion stimulus package, less than half the bank’s expected if the Democrats party. The host could win the Senate outside the White House, while retaining control. of the House of Representatives

Read: What Joe Biden’s presidency means for taxes, health care, housing, student debt – and another COVID-19 stimulus package

That would be “enough for a small positive fiscal impulse for US growth in the coming quarters,” he said. But that leaves short-term problems and thus, Goldman downgraded.

The team cut its Q1 US growth forecast from 7% to 3.5%, and significantly cut Europe’s fourth-quarter estimate from a 9.1% increase to 8.7%. “The risk will be on the downside if news about the virus continues to worsen,” Hatzius and the team said.

New closures announced across Europe in recent weeks are the main reason behind those deep cuts to the region’s short-term growth outlook. And while U.S. states and municipalities have not yet announced stricter restrictions on travel, in addition to a multi-day quarantine for people traveling from one state to another, the The economist has formulated potential changes to that forecast.

News of the virus was overshadowed by a lengthy and bitter election in the US, even as the country reported nearly 133,000 cases on Friday, a one-day case tally set a sixth record. three in a row. Biden was prepared to announce a new COVID-19 task force on Monday, Axios reported first.

Europe has seen a surge in hospital admissions, especially in the Czech Republic and Belgium. When adjusted for population, the data shows that individuals are hospitalized for viruses at a much higher level in Europe than in the US, the New York Times reported recently.

Goldman Sachs

But over the long term, Hatzius and team say their forecasts are much more optimistic than the others.

They expect “the current weakness will give way to much stronger growth as the closures in Europe are over and vaccines become available.” In the face of a slump in short-term growth, Goldman’s global 2021 forecast is now 6%, still well above the 5.2% consensus, but down half a point from the bank’s standing a month ago.

Read: Dr. Atul Gawande on COVID-19: ‘It’s never too late to save another 100,000 lives’

The team in particular is looking for the Food and Drug Administration to approve at least one vaccine in January, and mass vaccination of the US population will begin after that. That would lead to a strong growth rebound, or a V-shaped recovery in the second quarter, where the “V” stands for the vaccine, Goldman said.

Goldman Sachs

“An important assumption underpinning our forecast is that governments in countries severely affected by coronavirus infection will continue to do a fair job replacing lost private sector income. due to disruptions through wage subsidies, enhanced unemployment benefits and other income transfers, ”Hatzius and group said.

Read: The ’25-cent solution’ will prevent COVID degradation, said the most accurate forecast

Elsewhere, they are keeping estimates almost above consensus for emerging countries between 2021-22, except in China, where yields have returned to pre-pandemic levels.


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