Global intergovernmental economic organization for economic progress and world trade, the Organisation for Economic Co-operation and Development (OCED) has shared a promising economic review for the pandemic hit year.
The Paris-based organization shared that this year’s global recession will not be as deep as expected due to remarkable efforts taken by nations to counter the economic fallout from COVID-19.
OECD observed that the recovery next year will remain rather modest than anticipated with a projected 4.5 percent decline in global economic output this year with a roughly 5.0 percent return to growth in 2021.
Its earlier sets of projections in June had anticipated a global economic shrinkage of 6.0 percent in 2020 and 5.2 percent recovery growth in the following year.
“After the initial bounce-back in many activities following the easing of confinement measures, there are some signs from high-frequency indicators and business surveys that the pace of the global recovery has lost momentum since June, particularly in many advanced economies.”
OECD Statement
However, the global organization was quick to point out that “the economic outlook remains exceptionally uncertain, with the COVID-19 pandemic continuing to exert a substantial toll on economies and societies”.
OCED remarked that in what could be categorized as “an unprecedented sudden shock in modern times” global outputs declined more than 10 percent in the second quarter of 2020 compared to the end of 2019.
It was observed that even though the extent and timing of the pandemic shock differed across the major economies, but all experienced a sharp contraction in activity as necessary containment measures were implemented.
Effective and Timely Intervention
OCED observed that “without the prompt and effective policy support introduced in all economies to cushion the impact of the shock on household incomes and companies, the contraction in output and employment would have been substantially larger.”
Regional Impact
China was the only economy expected to expand in 2020 with a growth projection of 1.8 percent while its neighbor India would observe a 10.2 percent decline in its economic growth.
World’s biggest economy, the United States is expected to have a better 2020 than the global average with an anticipated decline of 3.8 percent this year.
In the eurozone, Germany is expected to perform better than its other EU compatriates with a 5.4 percent shrinkage to its economy compared to a contraction of 7.9 percent for the single currency area.
OCED predicted a 9.5 percent decline for the French economy while Italy and Britain were expected to see a decline of 10.5 percent and 10.1 percent respectively
The global organization added that the future growth prospects would depend on factors including the severity of new virus outbreaks, the type of restrictions imposed, vaccine deployment and the effects of fiscal and monetary policy actions on demand.
