Global recession won't be as deep as expected: OECD
PARIS The global recession this year will not be as deep as expected as a result of countries' efforts to counter the economic fallout from the coronavirus pandemic, the Organisation for Economic Co-operation and Development (OECD) said yesterday.
But the recovery next year will also be more modest than anticipated, the OECD said, projecting a contraction of 4.5 per cent in global economic output this year and a return to growth of roughly 5 per cent next year.
In its previous set of forecasts in June, the Paris-based OECD had been expecting the global economy to shrink by 6 per cent this year and return to a growth of 5.2 per cent next year.
"After the initial bounce-back in many activities following the easing of confinement measures, there are some signs from high-frequency indicators and business surveys that the pace of the global recovery has lost momentum since June, particularly in many advanced economies," the OECD said.
It pointed out, however, that "the economic outlook remains exceptionally uncertain, with the pandemic continuing to exert a substantial toll on economies and societies".
In the second quarter of this year, global output was more than 10 per cent lower than at the end last year, "an unprecedented sudden shock in modern times", the OECD said.
The extent and timing of the pandemic shock differed across the major economies, but all experienced a sharp contraction in activity as necessary containment measures were implemented.
Global trade collapsed, declining by more than 15 per cent in the first half this year, and labour markets were severely disrupted by reductions in working hours, job losses and the enforced shutdown of businesses.
"Without the prompt and effective policy support introduced in all economies to cushion the impact of the shock on household incomes and companies, the contraction in output and employment would have been substantially larger," it said.
As for major individual economies, China was expected to be the only one to expand this year, with projected growth of 1.8 per cent. India, on the other hand, would see its economy shrink by 10.2 per cent.
The United States, the world's biggest economy, would fare better than the global average, with a projected contraction of 3.8 per cent this year. - AFP