While vaccine hopes are driving markets higher to schedule traditionally strong gains, the United States economy is still in a susceptible position, according to previous Morgan Stanley chief economic expert Stephen Roach.
Roach thinks the skyrocketing number of coronavirus infections will trigger further lockdowns.
” That’ll lead to a short-lived relapse in the economy, probably in the first quarter,” Roach told CNBC.
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The financial expert discussed that those relapses reflect a sticking around vulnerability to economic downturn and the probability of aftershocks. He kept in mind that the current record rebound after the steepest-ever decline was just technical, with the crucial services sector still stopping working to get back on track.
The world’s largest economy might contract by one percent in the very first three months of next year, according to Roach. Similar figures were earlier voiced by analysts at JPMorgan.
Roach likewise repeated his bleak prediction for the fate of the US dollar, which he expects to drop over 30 percent by the end of next year. Because the pandemic wreaked havoc in the worldwide markets in March, the Dollar Currency Index, which determines the value of the greenback against a basket of currencies, toppled by over 10 percent.
The collapse of the dollar may be driven by enormous account deficit, the economist previously said. When he first voiced the prediction of sharp dollar devaluation, some saw the concept as insane, however Roach states it’s now ” playing out even more dramatically than even I thought when I blogged about it.”
” This is just the early stages,” he concluded. “The pressure on the dollar is most likely to be a lot more intense.”
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