Economy’s Outlook ‘Highly Uncertain Over Next Five Years’: Fitch Ratings
The economic outlook for the United States and other wealthy economies over the next five years is “highly uncertain in light of the unknown path of the coronavirus outbreak,” Fitch Ratings says in a new report.
The ratings firms says the coronavirus shock will create a lasting drag on world economic growth that goes beyond its forecast horizon.
“Our base-case projections show GDP in 2025 remaining around 3%-4% below the level implied by the pre-crisis trend in the 10 developed economies covered in the GEO,” Fitch Ratings said.
“This reflects our expectation that there will be supply-side damage from the shock from higher long-term unemployment and weaker investment.”
U.S. and global policymakers have shifted away from looking at the pandemic as a temporary if historic hit to the economy, and are now bracing for a more prolonged recession.
Worsening that prospect is the recent expiration of key relief measures for households and businesses, including enhanced jobless benefits that had been a life for many.
As of the end of July, some 30 million Americans reported going hungry and that number is expected to keep rising in the months ahead.
“Looking beyond the short-term dislocation of the economy, there is much evidence that a large, short-term collapse in output tends to leave lasting scars on the economy,” Fitch Ratings said.
“The recovery following the recession tends to be sluggish: typically, it usually takes years before economic output reaches its pre-crisis level.”