The global economy could shrink by at least 6% this year, according to the Organisation for Economic Cooperation and Development (OECD).
“With or without a second outbreak” of the new coronavirus (Covid-19), “the consequences will be severe and long-lasting,” the OECD warned in its economic outlook.
Without a second outbreak, “global economic activity falls 6% in 2020 and OECD unemployment climbs to 9.2% from 5.4% in 2019.” In addition, “living standards fall less sharply than with a second wave but five years of income growth is lost across the economy by 2021.”
A second wave, however, would see economic output drop by as much as 7.6%, “before climbing back 2.8% in 2021,” according to the OECD. In this scenario, “the OECD unemployment rate nearly doubles to 10% with little recovery in jobs by 2021.”
“The lockdown measures brought in by most governments have succeeded in slowing the spread of the virus and in reducing the death toll,” the OECD said, “but they have also frozen business activity in many sectors, widened inequality, disrupted education and undermined confidence in the future.”
“Even in countries where containment measures have been relatively light, early data are already making clear that the economic and social costs of the pandemic will be large,” the organisation said.
“Public spending should be well-targeted to support the most vulnerable and provide the investment needed for a sustainable recovery,” they said.