Financial sinter expects the coronavirus pandemic would plunge the U.S. economy and Europe into a deep recession this summer.
JPMorgan forecasts has changed in recent weeks as the outbreak has spread worldwide and caused the worst stock market trading over the past decade, the Bank’s economists write.
The publication writes that, initially, the outbreak was short-lived, but devastating blow to the global economy, but recent events have led to the fact that the Bank was preparing for a “much more dramatic” reduction in the first half of the year and “a new global recession.”
According to forecasts by JPMorgan, the US economy could shrink by 2% in the first quarter and 3% in the second, and the Eurozone economy could shrink by 1.8% and 3.3% in the same periods.
Economists argue that the abolition of major sporting, cultural and business events will lead to further reduced consumer spending, and the uncertainty associated with the virus, complicate coordinated economic restart.
According to JPMorgan, the sharp fluctuations of prices in financial markets and falling asset prices will also contribute to economic decline over the next two quarters.
The Bank’s economists said that the key to avoid an even more severe blow to global growth, the authorities need for incentives: limitation of stress in the financial market and support consumer demand through monetary policy.
Us equities opened higher after falling almost 10% yesterday.
The aggravation of the situation with coronavirus March 12 was the reason for the major collapse of the indexes (Dow Jones, S&P 500) on the US stock market since 1987.
March 11, the world health organization declared a pandemic in connection with the spread of coronavirus in the world Covid-19.
Stock indices of the countries of Western Europe fell to the lowest level since February 2016 Thursday following the meeting of the European Central Bank (ECB), which disappointed investors; trading in the U.S. was stopped for the second time this week.
The longest in the history of the “bull market” that began in the U.S. March 9, 2009, was completed. March 11 DJIA fell 5.9% to 23 553,22, the S&P 500 on Wednesday fell by 4.9% to 2741,38,
As stated by the head of the European Central Bank, Christine Lagarde, due to coronavirus Europe expects economic shock of 2008, if EU countries do not take urgent action in response to the spread of the virus.