Paris: The global economy will contract at least six percent this year, with the unprecedented loss of income and “extraordinary uncertainty” caused by measures to contain the coronavirus outbreak, the OECD said on Wednesday.
In the case of a second wave of contagion later in the year, economic output could shrink by as much as 7.6 percent, it warned.
In both scenarios, recovery will be “slow and uncertain”.
GDP growth should resume in 2021, by 5.2 percent if the virus is contained, and 2.8 percent if there is another infection wave, the Organisation for Economic Co-operation and Development said in its latest outlook, entitled “World Economy on a Tightrope”.
It warned that by the end of next year, “the loss of income exceeds that of any previous recession over the last 100 years outside wartime, with dire and long-lasting consequences for people, firms and governments.”
As unemployment rises, private debt levels in some countries are “uncomfortably high,” said the report, “and business failure and bankruptcy risks loom large.”
In its previous outlook in March, by when the outbreak had hit China but not yet the world´s other large economies, the OECD slashed its global growth forecast by half a percentage point to 2.4 percent, which would have been the worst performance since the 2008 financial crisis.
Things have got considerably worse since then, with commerce and travel shut down as governments scrambled to rein in the pandemic by keeping people at home.
The outbreak has nevertheless killed more than 400,000 people worldwide to date. Economic activity in the OECD´s 37 developed member countries has collapsed, the report said, by as much as 20 or 30 percent in some cases in what it called “an extraordinary shock”.
As long as there is no vaccine or treatment against the coronavirus, physical distancing to prevent contagion, testing people for the virus, and tracing and isolating those infected, will remain key to fighting the pandemic.