Analysts believe that even if some parts of the world re-emerge new crown cases, countries are unlikely to re-impose a full blockade. Suresh Tantia, senior investment strategist at Credit Suisse’s Asia Pacific CIO office, told CNBC on Thursday that it was unlikely that the situation in March would repeat itself. “The second wave of outbreaks has raised concerns among investors . . . But I think the key difference is that, unlike the last time in March, the chances of a global economic shutdown are very small. “
“If you look at the March sell-off, the reason for the sell-off is not the fear of the outbreak, but the stagnation of the global economy,” Tantia added. “That’s a concern for the market, but there will be no repeat of March … I think the market will look at that and will focus more on the recovery in the coming quarters. “
The U.S. added 45,557 confirmed cases of new coronary pneumonia on Wednesday, the highest number since the outbreak began in a single day, NBC News reported. Since Tuesday, California has added more than 7,000 new cases, a 69 percent increase in two days, and Florida has reported a record number of new cases.
In Asia, South Korea says it is fighting a “second wave” of infections around the capital Seoul, Reuters reported. In Beijing, the authorities have reinstated some restrictions.
Hartmut Issel, head of Asia Pacific equities at UBS Global Wealth Management, also told CNBC on Tuesday that it was “highly unlikely” that countries would once again embark on a full blockade.
“Blocking the whole country … is a big thing,” he said. It costs up to 3% of GDP each month, so even the richest countries on the planet can’t afford another two or three months of blockade. “
The International Monetary Fund on Wednesday cut its global economic forecasts again, warning that the government’s financial situation would deteriorate significantly as it tries to cope with the effects of the pandemic.
The IMF now estimates that global gross domestic product will contract by 4.9 per cent in 2020, down from the 3 per cent forecast in April.
The IMF explained that the revised forecast was due to the possibility that social alienation measures would remain in place in the second half of the year, with productivity and supply chains hit.
The IMF expects a longer blockade to further weaken economic activity in countries that are still struggling with high infection rates.