OECD presents two scenarios for global economy: with and without second pandemic wave
The Organization for Economic Cooperation and Development warned that the crisis caused by coronavirus pandemic would have long-term consequences. Experts presented two scenarios. In a less pessimistic forecast of the absence of coronavirus’ second wave, global GDP will decline this year by 6 percent, and euro area GDP will fall by 9.1 percent. Analysts predict the growth of the global economy by 5.2 percent in 2021. It is noteworthy that in March, under this scenario, the Organization predicted lower global economic growth in 2021 – only 3.3 percent.
“In a negative scenario entailing a second wave of the pandemic, the decline in global GDP in 2020 will be 7.6 percent. As for 2021, the OECD revised its March forecast for global economic growth downward by 0.5 percentage points to 2.8 percent,” stated the Organization’s report.
Experts also noted that global GDP, according to OECD estimates, in the first three months of 2020 decreased by about 3 percent, although measures related to the virus spread were introduced in many countries only in March.
“Activity fell sharply in China with a production level 10 percent lower than was noted in the last three months of 2019. Other Asian countries have also experienced falls in production,” the OECD research showed.
Experts added that the world trade is currently declining sharply with the fall in the volume of goods and services by more than 3 percent in the first three months of 2020, and the air transportation was particularly affected. International passenger traffic in April fell by 98 percent compared to the same month last year. The OECD informed that international freight transport fell in April by about 30 percent compared to last year.
“The volume of international export orders fell in April to a record low and remains extremely weak in May. A particularly significant decrease was found in European countries as well as in India and Indonesia,” the Organization said.
OECD warned that recovery would be slow and intermittent. OECD chief economist Laurence Boone said extraordinary policies will be needed “to walk the tightrope towards recovery”.
The report authors highlighted that a closer international cooperation is needed.
“Exchange of knowledge, medical and financial resources, reducing harmful trade bans for the economy are important to respond to the challenges posed by the pandemic,” highlighted the report.