OECD Interim Outlook Discusses Coronavirus Impacts on Global Economy
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Spread of the virus could result in global growth as low as 1.5% this year, cutting in half the OECD’s 2020 projection from November 2019.

The report calls for flexible working situations to keep as many jobs as possible, and implementation of temporary tax and budgetary measures to soften the impact in affected sectors.

The OECD also calls for adequate liquidity in the most affected countries to enable banks to help companies with cash-flow problems while containing the virus.

The Organisation of Economic Co-operation and Development (OECD) has published it latest Interim Economic Outlook, which warns that the coronavirus (COVID-19) presents the global economy with its greatest threat since the financial crisis. The Outlook, titled, ‘Coronavirus: The World Economy at Risk,’ investigates best- and worst-case scenarios and calls on governments to act immediately to limit the spread of the virus, protect people and businesses from its effects, and strengthen economic demand. 

The report notes that broader spread of the virus across the wider Asia-Pacific region and advanced economies could result in global growth as low as 1.5% this year, cutting in half the OECD’s 2020 projection from November 2019. Containment measures and loss of confidence could reduce production and spending and lead to a recession in some countries.

G20 economies should lead an internationally-coordinated effort for health care support and fiscal and monetary stimulus.

The report calls for flexible working situations to keep as many jobs as possible, and implementation of temporary tax and budgetary measures to soften the impact in affected sectors, such as travel and tourism. The OECD also calls for adequate liquidity in the most affected countries to enable banks to help companies with cash-flow problems while containing the virus.

The report points out that the G20 economies should lead an internationally-coordinated effort for health care support and fiscal and monetary stimulus to rebuild confidence. The Outlook concludes that, inter alia:

  • contractions in China are being felt globally, reflecting China’s critical role in global supply chains, travel and commodity market;
  • outbreaks in other economies are having similar effects;
  • prospects for China have been revised, with growth slipping below 5% in 2020, before recovering to over 6% in 2021, as output returns to levels projected prior to the outbreak of the virus;
  • the adverse impacts on confidence, financial markets, the travel sector and disruption to supply chains contribute to the downward revisions in all G20 economies in 2020; and
  • a longer lasting and more intensive coronavirus outbreak throughout the Asia-Pacific region, Europe and North America could cause global growth could drop to 1.5% in 2020, half the projected rate prior to the outbreak.

The Outlook calls for: ensuring well-resourced public health measures to prevent infection and contagion; implementing policies that support health care systems and workers; and protecting incomes of vulnerable social groups and businesses. The report further states that macroeconomic policies can help restore confidence and demand recovery as outbreaks ease, but that it cannot offset immediate disruptions from enforced shutdowns and travel restrictions. If growth is weaker for an extended period of time, coordinated multilateral action will be required. [OECD News Story] [Publication Landing Page] [Publication: Coronavirus: The World Economy at Risk]

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