The economic impact of COVID-19
In the US, major economic indicators in the second quarter reached levels unknown since the Great Depression as many states mandated lockdowns to curb the spread of the virus.
Gross domestic product slumped by 32 per cent from the previous quarter. Roughly 20 million jobs were lost, and the unemployment rate hit close to 15 per cent, which is unprecedented. This was compounded by a high death toll of more than 210,000.
Most sectors, including construction and infrastructure, retail and fashion, leisure, automotive and industrials, have been severely affected by the pandemic.
“We serve most of these clients, using coverage banking based on industry focus and expertise. We worked to support them and address their financial needs during the first months of the pandemic,” says Baiocchi Di Silvestri.
Green shoots in pharma, telecom and energy
Seven months after the World Health Organisation declared COVID-19 a global health crisis, the US economy is showing some signs of recovery. Household spending is up, thanks to government fiscal stimulus. Of the $4 trillion provided in the federal stimulus package, just under $1 trillion has been directed towards families.
“I do expect a gradual recovery. Intesa Sanpaolo forecasts US GDP to contract by 4 per cent by the end of the year. But we expect a recovery of up to 3.7 per cent in 2021,” says Baiocchi Di Silvestri.
Among the promising green shoots, he singles out the residential construction sector, which is expected to grow 0.5 per cent at year end. By the close of 2021, this same sector could show growth of around 3 per cent.
“There are three sectors that are recovering, or even growing, and there we are focusing our further commitment: pharma, telecoms and media, as well as energy,” says Baiocchi Di Silvestri. “Working from home and virtual learning, which have become the norm during the pandemic, need strong data centres, networks and content. This is a sector I can see doing very well.”
The energy sector is also set to benefit from mergers and new investments driven by environmental targets. Here, Intesa Sanpaolo is poised to play a key role thanks to its expertise in green and circular economy financing, including bonds and loans.
The urgent need of the US to upgrade its ageing infrastructure – airports, ports, dams and roads – will support the recovery of the sector, especially if the federal government steps in with a further stimulus package aimed at boosting employment.