Morgan Stanley: "US Economy to Grow 8.1% This Year"

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[Asia Economy Reporter Yujin Cho] Morgan Stanley forecasted that the U.S. economy will grow at a rate of 8.1% this year as it completely escapes the threat of COVID-19.

Morgan Stanley stated on the 9th (local time) , "This year, the U.S. Gross Domestic Product (GDP) growth rate will reach 8.1%, higher than the previous 7.6% forecast."

Yellen Zentner, Morgan Stanley's chief U.S. economist, said, "The U.S. economy is emerging from a recession phase," and added, "By the end of the first quarter, the GDP growth rate will fully recover to pre-COVID-19 pandemic levels."

The upward revision of the growth forecast was attributed to the resumption of economic activities following the lifting of lockdown measures, rapid vaccine distribution, and strong employment.

The new stimulus package pending approval by the U.S. House of Representatives aligns with previous forecasts, but the pace of growth in the first quarter supports the optimistic outlook.

Monetary easing policies are expected to continue. Morgan Stanley said, "Inflation will continue to exceed the Federal Reserve's (Fed) target of 2% until next year," but also predicted, "There will be no large-scale monetary tightening until 2023."

They further stated, "Monetary authorities are expected to repeat their existing dovish stance at next week's meeting and predict that interest rates will remain unchanged at least until 2022."

However, they added, "Due to the economic recovery and its effects on inflation and employment, the Fed will begin to reduce asset purchases starting January next year."

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