July 5, 2020
AliExpress WW
Analysts say countries are "unlikely" to reintroduce a full block if a second wave appears

Analysts say countries are “unlikely” to reintroduce a full block if a second wave appears

AliExpress WW

People enjoy the beach during the coronavirus pandemic in Huntington Beach, California, June 14, 2020.

AliExpress WW

APU GOMES | AFP | Getty images

Analysts told CNBC that countries are unlikely to impose yet another complete blockage, even though coronavirus cases are reoccurring in some parts of the world.

The situation is unlikely to recur in March, said Suresh Tantiya, senior investment strategist at the APAC CIO office at Credit Suisse. This happened when the rate of spread of viruses began to increase in the USA and Europe after the first appearance in China in December last year.

“This second wave of the virus is causing investors concern … but I think the key difference is that, unlike last March, this time it is unlikely that we will see a stop in the global economy,” he said.

“If you look at the March sales, the reason the markets sold was not because of problems with viruses, but mainly because the world economy was shut down,” Tantiya added. “This worries the markets, but until we see a repeat of March … I think the markets will consider this and focus on recovery over the next few quarters.”

According to NBC News, on Wednesday in the United States the largest number of cases was recorded in one day, and at the end of the day 45 557 new cases were recorded. Since Tuesday, more than 7,000 cases have been reported in California – up 69% in two days; Florida also reported a record number of new cases. Both states represent the two largest economies in the United States.

Blocking the whole country … will cost you 3% of GDP per month, so even the richest countries on the planet cannot afford another two, three months of complete blocking.

Hartmut Issel

Head of Equity, APAC, UBS Global Wealth Management

In Asia, South Korea said it the fight against the “second wave” of coronavirus infections around its capital Seoul, reports Reuters. In Beijing, the authorities reinstated some restrictions, as a new cluster emerged related to the wholesale market in the city – the country has since stated that the situation is under control.

Hartmut Issel, head of APAC at UBS Global Wealth Management, also told CNBC on Tuesday that countries are “very unlikely” to take the path of complete blocking again.

“Blocking the whole country … costs you 3% of GDP per month, so even the richest countries on the planet cannot afford another two, three months of complete blocking,” he said.

The International Monetary Fund on Wednesday again reduced its economic forecasts, warning that governments’ finances will deteriorate significantly when they try to cope with the effects of the pandemic.

According to estimates, in 2020 the country’s gross domestic product will decrease by 4.9%, which is lower than the forecast of 3% fall in April.

The IMF explained that the revised forecasts were related to social distance measures, which are likely to operate during the second half of the year, and productivity and supply chains will suffer.

In countries that are still struggling with high rates of infection, the IMF expects longer blocking periods to further affect economic activity.

– Noah Higgins-Dann and CNBC Sylvia Amaro contributed to this report.

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