Goldman Sachs cuts US GDP growth outlook after rise in COVID-19 cases

We have seen that almost every country that has hit hard with the Coronavirus pandemic has seen that their economy has shrunk by more than 2% compared to before the pandemic. This is the case with developed countries whereas the developing countries are hit harder due to more population and other factors.

Now, we know that the central banks in every country give their economic outlook for the coming quarter as well as the coming year. Similarly, US’ Goldman Sachs has given their outlook for the US economy and their growth outlook for the country.

Now, it is also interesting to note that the famous bank was estimated to give a 33% growth outlook for the US economy in the third quarter but that has been cut down to just 25% because of the rise in COVID-19 cases recently. Also, it is known that Goldman Sachs predicts that the US economy will shrink by 4.6% due to this pandemic which is a significant loss to the economy of the world’s largest economy. Having said that, the 25% growth in the single third quarter will also be the biggest gain since 1947 in the US economy.

But we should also note that this is because the economy was completely shut and there is always a jump in activity after the restart. Chief Economist at Goldman Sachs has said that “The sharp increase in confirmed coronavirus infections in the US has raised fears that the recovery might soon stall,”

Goldman Sachs also says that the US economy saw a 5% reduction in the GDP because of a “self-induced recession aimed at stopping the Coronavirus spread”. Regarding China, the economist said that “Although tensions with China will undoubtedly persist regardless of the election outcome, a re-escalation of the trade war would become less likely and the prospects for international cooperation on vital issues such as climate change would improve,”