The continued tensions about the coronavirus outbreak and its potential financial impact have caused Goldman Sachs to downgrade US economy’s growth forecasts for Q1 and Q2 2020. Q1 GDP has now been revised to 0% from +0.7% while the economy could contract by as much as 5% in Q2 2020, instead of seeing growth stagnate as per previous estimates.

However, on the positive side, Goldman Sachs expects Q3 GDP to grow by 3% to 1% as forecast previously. Business and consumer spending are expected to be hit hard in the coming months over rising fears of the spreading coronavirus, driving a strain in the economic growth in the US.

The bank expects economic growth to rebound in H2 2020 as long as the number of cases get contained soon successfully in the country. In Q4, the GDP could grow by as much as 4%, far higher than the earlier estimate of 2.25%, and this bounce could continue into 2021 as well.

Goldman Sachs has forecast total GDP of the US for 2020 to come down to 0.4% from its initial estimate of 1.2%. However, the bank has cautioned that these estimates have been made against high uncertainty which continues to prevail in global financial markets over the lack of clarity on just how badly the coronavirus pandemic can impact the global and US economies.