The Paris based policy forum Organisation for Economic Cooperation and Development (OECD) has predicted that the global economy will contract by 6 per cent in the best-case scenario because of the economic impact of the novel coronavirus pandemic.
The OECD said that the downturn for the global economy because of the pandemic will be the biggest in a century, but will stage a turnaround next year. The updated outlook for the global economy was issued by the OECD predicting a 5.2 per cent growth in 2021 for the global economy provided that the pandemic does not return.
On the other hand, if there is a second wave of the pandemic this year, the global growth contraction will be 7.6 per cent before growing only 2.8 percent next year, the OECD predicted.
“By the end of 2021, the loss of income exceeds that of any previous recession over the last 100 years outside wartime, with dire and long-lasting consequences for people, firms and governments,” OECD chief economist Laurence Boone said in an introduction to the refreshed outlook.
She urged various governments not to be averse to conduct debt financed spending to support low-paid workers and investment because the responses to the crisis will set the shape of economic and social prospects for the coming decade.
"Ultra-accommodative monetary policies and higher public debt are necessary and will be accepted as long as economic activity and inflation are depressed, and unemployment is high," Boone said.
Governments should cooperate on a treatment and vaccine for the virus, Boone said since the threat of a possible second wave of the pandemic is real which makes for high uncertainty.
The OECD expects a 7.3 per cent contraction in the United States economy for the current year and following it up with a growth of 4.1 per cent next year. The think tank said that there could be a contraction of 8.5 per cent this year I the US economy in the event of a second outbreak of Covid-19 followed by a growth of 1.9 per cent next year.
The OECD expects 11.5 per cent contraction in the economy of the United Kingdom for the current year, making it the possible worst performer among the advanced economies, with a 9.0 per cent growth next year. However if there is a second wave of the pandemic, the UK economy could contract by as much as 14 per cent in 2020 and a register 5 per cent growth in the next year.
The OECD expects a 9.1 per cent contraction for the eurozone for the current year with a 6.5 per cent growth next year. However with a second wave of the pandemic, the contraction can be as high as 11.5 percent this year while growth in 2021 will be about 3.5 per cent for the eurozone.
provisions to ensure banks have sufficient capital in the eventuality of a a wave of bankruptcies in Europe's largest economy of Germany should be taken by the German government, said Isabell Koske, OECD's senior economist. "The German corporate sector is very heavily financed through bank loans," she said. "Banks are therefore at greater risk of not seeing their loans again in the event of a wave of bankruptcies."
(Source:www.aljazeera.com)
The OECD said that the downturn for the global economy because of the pandemic will be the biggest in a century, but will stage a turnaround next year. The updated outlook for the global economy was issued by the OECD predicting a 5.2 per cent growth in 2021 for the global economy provided that the pandemic does not return.
On the other hand, if there is a second wave of the pandemic this year, the global growth contraction will be 7.6 per cent before growing only 2.8 percent next year, the OECD predicted.
“By the end of 2021, the loss of income exceeds that of any previous recession over the last 100 years outside wartime, with dire and long-lasting consequences for people, firms and governments,” OECD chief economist Laurence Boone said in an introduction to the refreshed outlook.
She urged various governments not to be averse to conduct debt financed spending to support low-paid workers and investment because the responses to the crisis will set the shape of economic and social prospects for the coming decade.
"Ultra-accommodative monetary policies and higher public debt are necessary and will be accepted as long as economic activity and inflation are depressed, and unemployment is high," Boone said.
Governments should cooperate on a treatment and vaccine for the virus, Boone said since the threat of a possible second wave of the pandemic is real which makes for high uncertainty.
The OECD expects a 7.3 per cent contraction in the United States economy for the current year and following it up with a growth of 4.1 per cent next year. The think tank said that there could be a contraction of 8.5 per cent this year I the US economy in the event of a second outbreak of Covid-19 followed by a growth of 1.9 per cent next year.
The OECD expects 11.5 per cent contraction in the economy of the United Kingdom for the current year, making it the possible worst performer among the advanced economies, with a 9.0 per cent growth next year. However if there is a second wave of the pandemic, the UK economy could contract by as much as 14 per cent in 2020 and a register 5 per cent growth in the next year.
The OECD expects a 9.1 per cent contraction for the eurozone for the current year with a 6.5 per cent growth next year. However with a second wave of the pandemic, the contraction can be as high as 11.5 percent this year while growth in 2021 will be about 3.5 per cent for the eurozone.
provisions to ensure banks have sufficient capital in the eventuality of a a wave of bankruptcies in Europe's largest economy of Germany should be taken by the German government, said Isabell Koske, OECD's senior economist. "The German corporate sector is very heavily financed through bank loans," she said. "Banks are therefore at greater risk of not seeing their loans again in the event of a wave of bankruptcies."
(Source:www.aljazeera.com)
