20 May

The US Congressional Budget office has said that it estimates that real gross domestic product will contract by 11% in the second quarter of this year, which is equivalent to a decline of 38% at an annual rate, and that the number of people employed will be almost 26 million lower than the number in the fourth quarter of 2019.

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World Bank commentators have written that all eyes are on China this week as additional fiscal support to stem downward pressure on growth is expected:

“How to spend may be as important as how much to spend. China’s fiscal stimulus should be aligned with its medium-term objectives of rebalancing the economy toward more inclusive and greener growth.

“This suggests that the priority this time around needs to be enhancing China’s social safety nets and investing in accelerating the transition toward a carbon-neutral, more resource-efficient and competitive economy.”

Deloitte UK chief economist Ian Stewart has written on the company’s blog that due to the UK’s slow lockdown easing and contraction of economic activity, the firm is downgrading its 2020 UK GDP forecast, ‘with an expected contraction of 11.7% compared to our previous estimate of 6.8%’.

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Stewart says: “For 2021 we see the economy growing by 8.5%, up from a previous forecast of 6.5%. Our 2020 forecast is at the low end of the current range of forecasts, which on average expect a contraction of 7.9% this year.

“However, the trend has been for forecasters to downgrade their numbers, with more recent forecasts consistently more pessimistic than earlier ones.”