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“Economic activity has probably already reached its lowest point,” Jan Hatzius, chief economist at Goldman Sachs, said in a report to clients Monday. “Confinement measures and social detachment are beginning to diminish with the cautious reopening of many countries.”
Goldman Sachs anticipates that advanced economies will experience an average retraction of 32% in the current quarter, an increase of 16% in the next three months and an expansion of 13% in the last quarter of the year.
At Morgan Stanley, chief economist Chetan Ahya said in a report on Sunday that “several high-frequency indicators we are tracking suggest that the global economy is in the process of hitting a low level.”
Consumer expectations have improved, mobility trends have risen compared to the lows, and household spending is falling more slowly than in the first weeks of the outbreak, he added.
“Our reading is that China’s economy reached its lowest level in February, and we believe that the eurozone should have reached in April and the United States in late April,” said Ahya.
In another report released Monday, HSBC economist James Pomeroy warned against betting on “a radical change in the global economy.” He cited figures from China, which indicate that consumer spending may take time to recover, because people are still afraid to buy or go back to work.
Governments are increasingly loosening restrictions on fighting the virus, but another notable threat is the possibility of a second wave of the outbreak, which could further undermine activity.
“The biggest negative risk to the global economic outlook is that infection rates will rise sharply again as the economy reopens,” Hatzius said. “After all, our recent analysis confirms that much of the medical improvement is due to confinement and social detachment.”
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