People enjoy the beach amid the coronavirus pandemic in Huntington Beach, California on June 14, 2020.
APU GOMES | AFP | fake pictures
Countries are highly unlikely to impose another full blockade despite a resurgence of new cases of coronavirus in some parts of the world, analysts told CNBC.
The situation is unlikely to repeat itself in March, Suresh Tantia, a senior investment strategist at Credit Suisse’s APAC CIO office, told CNBC’s “Street Signs” on Thursday. It was then that the rate of virus cases began to intensify in the US. USA And Europe, after first appearing in China last December.
“This second wave of virus is a concern for investors … but I think the key difference is that, unlike the last time in March, this time it is highly unlikely that we will see a global economy shutdown,” he said. .
“If you look at the March liquidation, the reason the markets sold was not because of the worries about the virus, but mainly because the global economy closed,” added Tantia. “It is a concern for the markets, but as long as we don’t see a repeat of March … I think markets will look at this and focus more on recovery in the coming quarters.”
The United States saw its highest number of cases in a single day on Wednesday and reported 45,557 new cases at the end of the day, according to the NBC News count. California saw more than 7,000 cases since Tuesday, a 69% increase in two days; Florida also reported a record number of new cases. Both states represent two of the largest economies in the US. USA
In Asia, South Korea said it is fighting a “second wave” of coronavirus infections around its capital city, Seoul, according to Reuters. In Beijing, authorities reinstated some restrictions when a new group linked to a wholesale market in the city exploded; the country has since said that the situation is under control.
Hartmut Issel, APAC’s chief equity officer at UBS Global Wealth Management, also told CNBC on Tuesday that countries are highly unlikely to return to the path of a total blockade.
“Blocking an entire country … costs up to 3% of GDP per month, so even the richest nations on the planet cannot afford another two or three month total blockade,” he said.
The International Monetary Fund cut its economic forecasts again on Wednesday, warning that government finances will deteriorate significantly as they try to deal with the consequences of the pandemic.
It now estimates a 4.9% contraction in global gross domestic product in 2020, less than the 3% drop it forecast in April.
The IMF explained that the revised forecasts were due to social distancing measures that probably remained in force during the second half of the year, with productivity and supply chains affected.
In countries that still struggle with high infection rates, the IMF expects longer closings to further affect economic activity.
– CNBC’s Noah Higgins-Dunn and Silvia Amaro contributed to this report.