Stressing that coronavirus pandemic has triggered severe recession and caused heavy damage to the economy, health, employment and well being of the people, the Organisation for Economic Cooperation and Development (OECD) has warned that a second outbreak would plummet the global economy by 7.6 per cent this year.
In its latest Economic Outlook, the OEDC noted that the global economy was expected to fall by six per cent in 2020 even if a second wave of infection was avoided. In the present Outlook , the organisation looked into two scenarios – one in which the virus is brought under control and the other in which a second global outbreak hits before the end of 2020.
In the Outlook, the OECD says that Europe will face the harsh economy as the countries in the continent got for relatively lengthy lockdowns. It said that the GDP is expected to come down by 11.50 per cent this year if a second wave of infection breaks out. The GDP will fall by over nine per cent even if a second wave is avoided. It said that the GDP of United States will see a downfall of 8.5 per cent in case of a second wave and 7.3 per cent in case of a second wave is avoided. Japan will see a plunge of 7.3 per cent and six percent respectively. Brazil, Russia and South Africa will see their economy hit by 9.1 per cent, ten per cent and 8.2 per cent respectively if a second infection wave happens. In the present economic situation, the economy of these three countries will be hit by 7.4 per cent, 8 per cent and 7.5 per cent respectively. The IECD said that the GDP of China and India will be less affected. They will see a 3.7 per cent and 7.3 percent dip respectively in case of second wave. In the present economic situation, China and India will see a dip of 2.6 per cent and 3.7 per cent GDP.
The OECD said that resumption of activity will take a long time to bring output back to pre-pandemic levels. The crisis will leave a lasting scar. The economic fall down will see a fall l in living standards, week investment and high unemployment. Tourism, entertainment and hospitality will be the worst hit sectors. Low skilled young and informal workers are also going to have bad days, the OECD warned.
OECD Secretary General Angel Gurria said that uncertainty loomed large over many countries. Noting that post-covid world will be shaped based on how governments act, he said that right policies could foster a resilient, inclusive and sustainable recovery but depends on how countries cooperate to tackle global challenges together. “International cooperation can create confidence and have important positive spill over effects,” he said.
Meanwhile, OECD Chief Economist Laurence Boone pointed out that extraordinary policies are needed to walk the tight rope towards recovery. “Restarting economic activity while avoiding a second outbreak requires flexible and agile policy making, “She said.
“Higher public debt cannot be avoided but debt financed spending should be well-targeted to support the most vulnerable and provide the investment needed for a transition to a more resilient and sustainable economy,” she said.
She pointed out that governments should seize the opportunity to build a fairer economy, modernising taxes, making competition and regulation smarter, government spending and social protection.
In the outlook, the OECD has called for international cooperation to help end the pandemic more quickly and to speed up economic recovery. It also called for encouraging more resilient supply chains, including larger holding of stocks and more diversification of sources locally and internationally.
