Coronavirus is no doubt the black swan of 2020, prompting an unprecedented lockdown in China with knock-on effects to global supply chains now starting to emerge. At the same time, the number of international cases and disruptions to economic activity continue to rise.
In the latest edition of Top of Mind at Goldman Sachs, Allison Nathan interviews Harvard’s Dr. Barry Bloom and University of Minnesota’s Dr. Michael Osterholm to better understand what we know—and don’t know—about the virus today. They explain that coronavirus is proving more virulent and contagious than the common flu, and its ability to be transmitted while patients are asymptomatic makes containment more challenging. Given disruptions to activity and consumption in affected areas, as well as spillover effects on global supply chains, our economists have substantially reduced global growth expectations to about 2% this year and now think central banks around the world will cut rates to help offset the economic blow, with the Fed already taking action in line with GS economists’ expectations.
GS economists discussed their recent central bank forecast changes in client webcast, which we’ve excerpted here (from a Goldman Sachs Research webcast on March 2, 2020).
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