The rapid launch of the COVID-19 vaccine in the UK means its economy will grow faster than that of the United States, its transatlantic ally, according to an economist at Goldman Sachs. Early indicators show the country is recovering faster than expected, said Goldman economist Sven Jari Stehn, as half the population has received their first injection of COVID-19 and restrictions on non-essential stores and the consumption of beverages in beer gardens have been relaxed.
“The UK economy is recovering sharply from the COVID crisis,” Stehn said, in a note titled “European views.” “Given the recent upward revisions to real gross domestic product, our forecast for 2021 is now at a surprising 7.8% for 2021, above our expectations for the US. [Goldman forecasts it to grow 7.2%] and well above the Bloomberg consensus of 5.5%. “Read: Biden to visit the UK and Belgium in June for his first overseas trip The turnaround is all the more surprising because the UK was the worst performing economy in the world. G-7 last year, with an economy that contracted 9.8%. But its success in vaccinating its citizens and overall compliance with strict lockdown rules means that the spread of the coronavirus has slowed. At the peak of the second wave, deaths from COVID-19 in England and Wales have fallen by 97%, according to data from the Office for National Statistics. The number of people hospitalized related to the virus also fell to 4% from a January peak. Population has spent more in stores and restaurants and is on track to return to some form of normalcy in July. In April, the flash purchasing managers index (PMI), the economic indicator that measures future trends in manufacturing, fu It is much stronger than expected in the UK, and the services PMI moved strongly into expansionary territory. Read: 5 Questions for Britain’s Brexit Man on Wall Street Stehn wrote: “Combined with other recent growth metrics, including a 5.4% increase in March retail sales, our current activity indicator (CAI) now works at an annualized rate of 7.1% in April. In addition, the growth of COVID cases has remained low and the launch of the vaccine has advanced, with half of the population vaccinated. “Therefore, we see that the government‘s reopening plans are well under way … As a result, we expect very strong growth in the April and May data, and we remain comfortable with our 5.5% growth forecast ( not annualized) for the second quarter “. Read: UK Consumer Confidence More Cautious in April Latest data shows there were 2,685 new COVID-19 cases and 17 deaths within 28 days of a positive test reported in the UK on April 27, according to Public Health England, and 33,843,580 people have now received the first dose of a vaccine and 13,201,811 have received a second dose. If Goldman’s prediction comes true, the UK economy will grow the fastest since WWII. Bank of England economist Andy Haldane has predicted that it will come back to life as a “coiled spring.” While the UK government has invested in significant stimulus to keep companies afloat, this has been overshadowed by the $ 1.9 trillion stimulus seen in the US, even after accounting for the size differences.