Commentators at two if the world’s leading investment banks see some cautious grounds for optimism. But the IMF has issued grim predictions about the economic outlook for the Middle East, Central Asia and Africa.
Jan Hatzius, chief economist at Goldman Sachs, believes the picture for investors is improving because of “aggressive” action from policy makers and improving predictions around Covid-19 fatalities and peak hospital usage.
He says: “Both of those factors have convinced investors that the downside relative to where we were a few weeks ago is smaller even though the economic news is still very bad.”
Morgan Stanley equity analyst Matthew Harrison says investors should take account of progress toward treatments from the pharma sector:
“Despite the significant concerns we raise about the path to a US recovery, we continue to believe that the market is underestimating the impact that the drug pipeline can have on the public policy response to the virus… with therapeutics available in the near term and a vaccine on the horizon, the market could start to ‘look through’ the slow US recovery and back to pricing in future growth.”
The IMF has issued its regional economic outlook for the Middle East and Central Asia. The effect of lockdown measures and the collapse in the price of oil has hit countries with a “double whammy” it reports.
Jihad Azour, IMF director of Middle East and Central Asia, said: “We project the region to contract this year, with substantial economic impact. This downward revision of more than 4 percentage points of GDP in one year is equivalent to removing $425 billion from the region’s total output…”
For sub-Saharan African the IMF warns Covid-19 represents “an unprecedented threat to development”. The body said: “The region’s economy is projected to contract by 1.6 percent this year—the worst-reading on record.”