OECD - The global outlook is highly uncertain Mittwoch, 10. Juni 2020 - 10:02
The COVID-19 pandemic is a global health crisis without precedent in living memory. It has triggered the most severe economic recession in nearly a century and is causing enormous damage to people’s health, jobs and well-being.
The Outlook focuses on two equally probable scenarios – one in which a second wave of infections, with renewed lock-downs, hits before the end of 2020, and one in which another major outbreak is avoided.
The lockdown measures brought in by most governments have succeeded in slowing the spread of the virus and in reducing the death toll but they have also frozen business activity in many sectors, widened inequality, disrupted education and undermined confidence in the future.
As restrictions begin to be eased, the path to economic recovery remains highly uncertain and vulnerable to a second wave of infections.
With or without a second outbreak, the consequences will be severe and long-lasting.
- A renewed outbreak of infections triggers a return to lock-downs.
- World economic output plummets 7.6% this year, before climbing back 2.8% in 2021.
- The OECD unemployment rate nearly doubles to 10% with little recovery in jobs by 2021.
- Global economic activity falls 6% in 2020 and OECD unemployment climbs to 9.2% from 5.4% in 2019.
- Living standards fall less sharply than with a second wave but five years of income growth is lost across the economy by 2021.
The economic impact of strict and relatively lengthy lockdowns in Europe will be particularly harsh. Emerging economies face the challenge of strained health systems adding to difficulties caused by a collapse in commodity prices.
Many countries have introduced support measures to protect jobs in the near-term in hard-hit sectors, but young workers in particular are vulnerable.
- Strengthen health care systems and build the supply of medical equipment.
- Use test, track, trace and isolate and distancing strategies to limit virus outbreaks.
- Ensure global cooperation to develop and distribute a vaccine and treatments.
- Help people and businesses in hard-hit sectors move into new activities, strengthen income protection.
- Facilitate rapid firm restructuring and accelerate digitalisation.
- Maintain liquidity support and be prepared for renewed financial turmoil.
- Build more resilient supply chains with larger stocks and more diversification of sources.
- Keep interest rates low and ensure public spending and taxation policies support economic activity.
- Invest public finances for people’s well-being, focus on fairness.
Public spending should be well-targeted to support the most vulnerable and provide the investment needed for a sustainable recovery.
The global economy is now experiencing the deepest recession since the Great Depression in the 1930s, with GDP declines of more than 20% and a surge in unemployment in many countries. Even in countries where containment measures have been relatively light, early data are already making clear that the economic and social costs of the pandemic will be large. Growth prospects depend on many factors, including how COVID-19 evolves, the duration of any shutdowns, the impact on activity, and the implementation of fiscal and monetary policy support. Uncertainty will likely prevail for an extended period. Given this uncertainty, two scenarios have been developed to reflect the possible evolution of the global economy. In the double-hit scenario, it is assumed that renewed shutdowns are implemented before end of 2020, following another surge of the COVID-19 virus.
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