For anybody not a secret that we are in the midst of a new world economic crisis. However, the current crisis is not like previous. The closest occurred in 2008-2009, but the current has already surpassed his financial losses and potential damage. Here it is closer to the great Depression of the twentieth century.
The reasons that caused the crisis 2020, also differ from the previous one. They are connected, primarily, with the forced stop in the various sectors of the economy due to the spread Covid-19, not problems in the mortgage and banking sectors. As the causes of the crisis other, and the old measures to help the economy will be different. The difficulty is that nobody knows how to deduce world economy from such a crisis.
A month ago, economists had forecast a V-shaped recovery of the world economy, that is, the rapid decline was to begin rapid growth. Economists had forecast that the crisis the world economy will be back by the end of 2020. But, as the epidemic in the world, rising unemployment, and falling consumer demand forecasts began to deteriorate. So, the V-shaped recovery already in the markets are not waiting. It is difficult to predict which scenario will restart the economy, but what we can say with greater certainty, it is about the fact that the pre-crisis level the economy reaches in the best case a couple of years.
Horror stories of the IMF
As we have said, the current crisis is significantly different from the previous one, and when it will end nobody knows. It is possible that for the world economy this year will be most severe in the last 100 years. So, the crisis caused by the pandemic may lead to total loss of world GDP to 9 trillion dollars.
In one scenario the IMF, if the second half of the year the epidemic will go on recession, then economic performance may be reduced by 6%. In the case of the continuation of the pandemic in 2021, the current contraction in global GDP added another 2.2% drop.
The baseline scenario of the IMF for 2021 shows the forecast faster economic recovery and global growth of 5.8% after the end of the pandemic. Since 1980, this will be a record indicator of growth in the world economy. But this is only a forecast, and it depends on whether the second wave of the pandemic, and how soon a vaccine.
The most optimistic forecasts of experts, by the end of 2021 to pre-crisis indicators will return only China. World GDP will approach the level of the fourth quarter of 2019 until mid-2021, the GDP of the States – in the first quarter, and the EU – in the third quarter of 2023.
However, the recovery of China's economy, which is hoped by many analysts, yet there is slower than expected. Thus, the producer price index for the month of April fell by more than 3%, the deflationary pressure on the wholesale prices are still strong, and auto sales in April grew by only 4.4% compared to the same period of 2019. By the end of 2020 this sector will fall by 15%.
In spite of the fact that almost 80% of the cafes and restaurants of China resumed work, they can take not more than 50-60% of the visitors due to social distancing. About 20% of the restaurants in the country, according to the forecast, won't be able to stand up.
The economy of China to cut the wings maybe the White house if the United States and China will return to the trade dispute. And, in truth, all this goes. In January 2020, the two countries have agreed on a trade deal. But their relationship deteriorated when, in April, the President of the United States began to accuse Beijing of concealing information about the coronavirus, and, in General, China has become the cause of the epidemic.
On the other hand, China starts to behave more aggressively. In response to accusations from the United States, Beijing has started to criticize the actions of the European authorities, as they “helped” for the population in the fight against coronavirus, and accused the United States itself in the creation of a coronavirus. Last week, Beijing began to threaten Australia's economic boycott for wanting Canberra to launch an investigation into the causes of the virus.
The behavior of Beijing is reminiscent of his own behavior during the crisis of 2008–2009, when China believed that they can get other countries to stand up, and surpass the US economy and Europe.
This behavior is definitely not like Donald Trump, who at any moment could trigger a new trade conflict with China, and to revise the terms of recent trade agreements. A new conflict may slow the recovery of China's economy, and an optimistic Outlook on China can quickly become pessimistic.
the States are broken but don't give up
С Поднебесной всё ясно, а как дела в экономике №1? К сожалению, не очень. США пострадали больше всех от пандемии COVID-19, и, если многие страны ЕС уже начали ослаблять ограничительные меры, то Штаты даже близко не стоят к этим шагам. Economy страны в нокдауне. Например, апрельский показатель безработицы в США вырос до 14.7%. Другими словами, 20.5 миллионов человек потеряли рабочие места за прошлый месяц.
In 40% of the country's households with income of up to 40 thousand dollars a month people lost their jobs during March. Among the first – reduction of the staff took place in companies with low earnings: hotels, catering establishments, travel agencies. ING predicts that jobs will decrease by 12 million, and according to the expectations of Jerome Powell, the fed, the decline on this indicator can reach 60% before the end of may.
Apparently, we should not expect a speedy return to their work those who were dismissed. In some sectors of the economy, certainly. For example, United Airlines plans to reduce office staff by 30% in October. The company's management decided until then to dismissal, because in this case, the carrier may rely on government-provided assistance in the amount of $ 5 billion.
Among the population have a tendency to farm more efficiently, and habits in consumption have changed. A survey conducted Coresight Research showed that more than 50% of the US population are ready to reduce spending on celebration of Christmas, and about 70% of respondents due to fear of getting sick not ready to visit public places after the removal of restrictive measures. Of these 70%, more than half are willing to give up going on shopping centers, and 1/3 of these respondents are not going to visit these places for more than 6 months.
Uncertainty and it is not only epidemic, but also with the depth of the fall of the U.S. economy, and with the speed of her recovery. According to experts, the recovery of the sectors of entertainment, transport, wholesale and retail trade will take a minimum of 8–9 blocks. Industrial production, financial and business services and high-tech production will require 5–8 blocks to more or less recover.
At the Deutsche Bank forecasts the US economy to the end of the year will recover only 30–40% as employment and GDP will be reduced by 7.1%. Bank analysts expect the return rate to pre-recession levels by 2022, and possibly later.
Where to invest until there is a restoration
Now, when cash flows changed their direction, and the previously profitable company sidelined, the markets are looking for new napravleniya investment recovery time.
Besides, the epidemic is far from over, and the weakening of the punitive measures threatened by the growth of new outbreaks. For example, in the Chinese city of Wuhan again identified new cases of the virus in Germany also reported an increase in the number of infected people after the easing of restrictions. These data make me nervous, not only government, but business. The second wave of coronavirus can nullify all efforts at recovery as the world economy and individual economies.
In the current situation in the field of view of the investors may be technological and pharmaceutical companies, not financial and cyclical sectors, which are usually associated with the growth and decline of the economy.
Special attention will be paid to the companies that develop the vaccine from COVID-19. For example, you can look at the shares of biotech company Gilead Science, which since the beginning of the year rose 16%, while the rest of the market fell. The company develops antiviral drugs for the treatment of HIV, hepatitis B, C and influenza. In early March, the Issuer has announced two studies on the safety and efficacy of the drug ramdevpir for adults with a diagnosis of COVID-19. This drug is still not licensed and not approved by who, and was originally developed to combat the Ebola virus. According to the statements of the who, this drug is a promising candidate for the treatment of coronavirus.
From other drug manufacturers that are also involved in the development of a vaccine, attention are Johnson &Johnson, Novavax, Pfizer and Sanofi.
The other option for investment could be shares of NVIDIA. Within two months of the shares of the company rose by 64%. Because of the epidemic dramatically increased the demand for computer games, which in turn increased sales of graphics accelerators. For example, in Germany, the Issuer sold graphics cards in April, a 48% increase.
The case NVIDIA go up the hill and because of the growing popularity of cloud gaming. The company launched this service in February 2020, and within one month the number of subscribers exceeded one million.
The growth in demand for components for data centers and absorption Mellanox and Cumulus – all this will be a good Foundation for growth in 2020 and 2021.
In the last quarter of 2019, the Corporation's market capitalization has exceeded 10 billion U.S. dollars. While long-term debt of the Issuer not more than 2 billion U.S. dollars. In the first quarter of 2020, experts expect net profit to 1.64 $ for one paper company with revenues of nearly 3 billion U.S. dollars.
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