Goldman Sachs cuts growth forecasts due to intense 2nd wave of Coronavirus and fear that it may get worst during the winter season. According to Goldman Sachs, the highest number of coronavirus cases in many European countries and the U.S., pushing the authorities for more strict restrictions will result in damaging the already fragile economy.

The chief economist Jan Hatzius who is leading a team of analysts slashed growth forecasts in a note to clients on Saturday. He said that Biden has to work with a Republican majority in the Senate and he might have to settle with a very low economic package than the expectations from different sectors. In coming quarters that small economic package will not be able to revive and support the U.S economy in the longer term.

The team slashed its first-quarter U.S. growth forecast to 3.5% from 7%, and for Europe, it reduced the growth number from 9.1% to 8.7%. These estimates are changed due to fresh lockdowns recently across Europe and the U.S is breaking records of the highest number of cases reporting every day.

But for the longer term, Hatzius and the team say their forecasts are much more positive than others. The Hatzius and the team expect a strong growth after lockdowns end in Europe and vaccine become available. Goldman’s predicting 2021 global forecast of 6%. The Goldman team is expecting that FDA will approve at least one vaccine by January and that can bring sharp growth figures in the 2nd quarter of 2021.

The Hatzius and the team said that their forecast is based on the assumption that governments in countries hard-hit by coronavirus pandemic will continue to provide financial assistance to its private-sector employees who have lost the jobs during the pandemic.

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