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  1. Analysis
September 15, 2020

US economy may recover to pre pandemic levels by Q2 2021, according to leading macroeconomic influencers

The US economy was earlier projected to return to pre Covid-19 levels by the fourth quarter of 2021. New analysis indicates that the country’s economy may recover sooner than previously forecast. Macroeconomic influencers share their views on the Covid -19 impact.

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  • How might the Chinese government react?
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Daniel Lacalle

Daniel Lacalle, chief economist at Tressis SV, tweeted about the projected recovery of the US economy. The US GDP is expected to recover to pre-Covid-19 levels two quarters earlier of Q2 2021 than the previously projected Q4 2021, according to Morgan Stanley.

Lacalle added that the recovery will mainly be supported by debt-fuelled government spending with the private sector requiring more time to recover.

Antonio Mele

Antonio Mele, economist at LSE Department of Economics, shared an article on the job crisis in the UK. The planned redundancies in the UK are twice that of the previous recession in 2008, according to statistics from the Institute for Employment Studies (IES).

More than 380,000 jobs were reported to be at risk between May and July 2020. Further, 445,000 jobs may be made redundant between July and September, according to the IES. Although the planned redundancies and actual redundancies may differ, the number of redundancies announced is still higher compared to the previous recession.

The UK government’s ‘Plan for Jobs’ programme may help in protecting and supporting job creation apart from the £2bn ($2.38bn) kickstart scheme that supports employers in creating training and apprenticeship positions.

Prof. Steve Hanke

Prof. Steve Hanke, economist at Johns Hopkins University, shared an article on how the stimulus package announced by the UK government is giving rise to a wave of fraudulent claims under the job retention scheme. The error and fraud rate in the scheme is estimated to be between 5% and 10% causing the government to lose £3.5bn ($4.49bn) to fraudulent claims.

Apart from the job retention scheme, the Bounce Back Loan programme has also witnessed fraudulent applications. The loans are self-certified and banks are not liable for them hence background checks are rarely conducted. According to the Policy Exchange think tank, the fraud and error rate in these schemes could cost the government between £1.3bn ($1.66bn) and £7.9bn ($10.14bn).

Adam Tooze

Adam Tooze, director of European Institute, shared his article on the politics surrounding central banks and foreign exchange. The US Federal Reserve recently announced its new policies of targeting higher inflation in the US economy, which some experts feared would weaken the US dollar’s global dominance as a reserve currency.

During the European Central Bank (ECB) press conference, several market experts and commentators expected the bank to comment on the euro’s appreciation against the dollar. Tooze noted that commenting on exchange rates does not fall under the tasks of a central bank as the main focus is on ensuring price stability.

The ECB should focus on formulating fiscal and monetary policies that restore the balance in the euro area. Such actions will ensure that the exchange rate values will restore themselves, Tooze added.

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Free Whitepaper
img

What is the impact of China’s Zero-COVID lockdowns on economic activity, consumer goods and the foodservice industry?

While wanting to protect the country from being overwhelmed by Omicron, China’s adherence to a Zero-COVID policy is resulting in a significant economic downturn. COVID outbreaks in Shanghai, Beijing and many other Chinese cities will impact 2022’s economic growth as consumers and businesses experience rolling lockdowns, leading to a slowdown in domestic and international supply chains. China’s Zero-COVID policy is having a demonstrable impact on consumer-facing industries. Access GlobalData’s new whitepaper, China in 2022: the impact of China’s Zero-COVID lockdowns on economic activity, consumer goods and the foodservice industry, to examine the current situation in Shanghai and other cities in China, to better understand the worst-affected industry sectors, foodservice in particular, and to explore potential growth opportunities as China recovers. The white paper covers:
  • Which multinational companies have been affected?
  • What is the effect of lockdowns on foodservice?
  • What is the effect of lockdowns on Chinese ports?
  • Spotlight on Shanghai: what is the situation there?
  • How have Chinese consumers reacted?
  • How might the Chinese government react?
  • What are the potential growth opportunities?
by GlobalData
Enter your details here to receive your free Whitepaper.

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