Coronavirus Outbreak: Morgan Stanley, Goldman Declare Global Recession Is At Our Doors

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Economists from Morgan Stanley and Goldman Sachs have declared that the coronavirus has triggered a global recession.

A day after President Donald Trump admitted that the slowdown in the US market is set to be ‘a bad one,’ economists revealed their forecasts and how the world could avoid entering a recession.

Amid the global economic slowdown, the pandemic has spread on a massive scale to Europe, India, US from China, putting a lot of pressure on the global economies.

Morgan Stanley said that a global recession is now its ‘base case,’ with growth expected to drop to 0.9% this year. Goldman Sachs predicted a slower growth to 1.25%.

This slowdown is not expected to be as painful as the 0.8% contraction of 2009, but it will be worse than that in 2001 and the early 1990s. Both Morgan Stanley and Goldman Sachs expect the economy to bounce back in the second half, but alert that the risk can pose immense economic pain.

The growth projections will also put additional pressure on policy makers to do more to curtail the health emergency.

Amid the COVID-19 outbreak, Investor’a confidence in Germany have dropped, U.S. retail sales have plummeted the most in a year.

‘While the policy response will provide downside protection, the underlying damage from both COVID-19’s impact and tighter financial conditions will deliver a material shock to the global economy,’ Morgan Stanley’s economists claimed.

George Saravelos, a currency strategist at Deutsche Bank AG, said that governments may need to step in to ensure support for households and companies.

S&P Global, on Tuesday said that the magnitude of the blow from the outbreak means the world’s most powerful economy is entering recession, if not already in one.

‘The hit to consumer spending and business investment, plus the oil price damage to energy infrastructure investment likely means a 1% contraction in first quarter and 6% contraction in the second,’ U.S. Chief Economist Beth Ann Bovino said in a note.

Predictions for the U.S. market still continue to be unclear, while some predict a decline as much 10% on an annualized basis in the three months through June. Goldman Sachs predicts a 5% fall after zero growth in the first quarter.

Also Read: Coronavirus Outbreak: Moody’s Lowers India’s 2020 Growth Projection To 5.3%

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