ANKARA

Goldman Sachs revised up US economic growth forecast by 0.5 percentage points for 2021, as the Democratic blue wave makes it more likely to see a larger stimulus package adopted in the first quarter of the year. 

The US' GDP is now expected to grow by 6.4% this year, up from the previous estimate of 5.9%, the American multinational investment bank and financial services company said in a report Thursday.

After Democrats have won the two Senate seats in Georgia runoff elections on Wednesday, giving them the control of the Congress, and Joe Biden winning the White House on Nov. 3 elections, they are "likely to pass further fiscal stimulus in the first quarter," the report said.

Goldman Sachs said it expects a relief package of around $750 billion, which would include $300 billion in stimulus checks for jobless Americans.

The investment firm also forecasts the US unemployment rate decreasing to 4.8% at the end of this year, to 4.3% at the end of 2022, and later to 3.9% and 3.6% for the end of 2023 and 2024, respectively.

Although COVID-19 vaccines provide hope for faster recovery in the world's largest economy, "discouraging news on the virus front— including the slow pace of vaccination and the emergence of more infectious virus strains—suggests that the spending boost from the stimulus will be more lagged than usual," it warned.

More infectious strains of the virus that are spreading globally pose a downside risk to recovery as "state restrictions to control the virus will probably remain tight in the first quarter, and many households are likely to continue to cautiously avoid high-contact consumer services," the report said.

The US still leads the world in COVID-19 figures with over 21.5 million cases and more than 365,000 deaths as of Friday, according to Johns Hopkins University data.