The anticipated contractions for GDP are for the United States and the eurozone, and cover the first and second quarters of the year
The largest bank in the world, JPMorgan Chase updated its economic forecasts for some regions taking into account the outbreak of coronavirus and its impact on financial markets.
The banking institution indicated that “the evolution of the news on the virus and the material contraction “of market conditions make it” reasonable to expect further revisions to the low” in the GDP global during the first half of the year.
They calculate that in the US it is possible to contract 2% in the first quarter and 3% in the second, while for the eurozone the contraction would be 1.8% and 3.3%, respectively.
JPMorgan economists cite “sudden stop” in activity economic who are creating quarantines and social distancing measures around the world, and how financial conditions “are contracting profoundly as the perception of credit quality” is deteriorating in different assets.
“As we resign ourselves to the inevitability of a large and broad ‘shock’ to global growth, the key question is whether we can avoid a long-lasting, traditional recession incident,” say the economists, highlighting the authorities’ response. in the form of stimulus packages and monetary policies that support consumer demand.
For its part, the CNBC channel also refers to the estimates of JPMorgan but in a more optimistic tone, pointing out that this “new global recession” might not enter the technical criteria of the National Bureau of Economic Research (NBER) because it should last “more than a few months” and economists foresee a ” growth rebound mid-year. “
“It is expected that the COVID-19 affect the economy in February, March and April, generating contractions in the GDP in most countries for at least one of the two quarters it extends, “said the firm’s chief economist, Bruce Krasman.” If our current forecast is met, it seems appropriate to characterize it as a new global recession, “he added.
“Our mid-year growth pickup forecast would not fit NBER’s criteria that recessions should last longer than just a few months,” he said.
He also noted that “the scope of social distancing is increasing at a dramatic rate. Italy is in total isolation and the US and other countries are suspending their flights from a wide range of nations.”
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