Daily Management Review

OECD updates global economy forecast for second pandemic wave


The global economy, even in the absence of a second wave of a pandemic and new restrictions, will decrease by 6% in 2020. In the event of a second outbreak, the recession will amount to 7.6%, follows from the updated forecast of the Organization for Economic Cooperation and Development (OECD). In the euro area, the figure will decrease by more than 9%, in the US - by 8.5%.

Local Government of Manila
Local Government of Manila
The Organization for Economic Co-operation and Development (OECD) published its economic forecast, according to which the fall in world GDP in 2020 could be 6% in the absence of a second wave of spread of the new coronavirus and 7.6% if it appears before the end of the year. Next year, the OECD expects global economic growth of 5.2% if there is no second wave, otherwise global GDP will grow by only 2.8%. Among the key risks are the decline in employment among the most vulnerable groups of the population, the growing debt burden, as well as increased volatility in the financial markets of developing countries.

In a more positive scenario, the most pronounced decline will be observed in the euro area (minus 9.1%) and in the UK (minus 11.5%). According to the OECD forecast, German GDP will decrease by 6.6%, French - by 11.4%, Italian - by 11.3%. In the US, the decline will be 7.3%. In the event of the second wave, the euro zone will sag by 11.5%, the UK - by 14%. In Germany, the reduction will be 8.8%, in France - 14.1%, in Italy - 14%. In the US, the decline will increase to 8.5%.

The OECD forecast is by far the most pessimistic among major international organizations. For instances, the World Bank on June 8 forecasted a 5.2% decline in the global economy this year, while in 2021 the WB expects global GDP to grow by 4.2%. The IMF has not updated the forecast at all since the beginning of April, when a decline of 3% was expected this year with a 5.8% rebound next year. Rating agencies are also expecting a smaller decline: Fitch estimates at 4.6% (with an increase of 5.1% in 2021).

source: oecd.org