Economists warned that resurging COVID-19 cases could pose a risk of further economic downturn despite mounting hope that an effective vaccine would be approved as soon as December. They said the vaccine would not be a quick fix for the current recession because distributing it widely would take months. New infections are rising again, prompting authorities in Europe and some US states to reimpose restrictions at the price of sluggish economic activity.
Analysts at Wall Street expect it would not take much for the economy of the US, Europe, and Japan to shrink again after bouncing back from the deepest recession in decades. This put pressure on governments and central banks to revive demand and set aside other concerns. American and European policymakers are debating how much they could and should do with further fiscal stimulus. At the same time, central banks have run out of tools in their arsenals.
Bloomberg Economics forecast global GDP would contract by 4.1% in 2020 before rebounding to 4.9% growth in 2021. However, there is an unprecedented uncertainty stemming from the pandemic situation. Analysts at JPMorgan Chase & Co project an economic contraction in the US next quarter as some states reimpose virus containment measures. Latest data showed fewer people dining out at restaurants and more of them claiming unemployment benefits.
In Europe, the purchasing managers' index (PMI) dropped sharply, suggesting that a double-dip recession is on the way. A separate PMI survey also showed a worsening situation in Japan’s manufacturing and service sectors. The IMF and G20 also warned a possible fresh global economic downturn despite positive news about vaccines.
