Global economy predicted to shrink by 6%, in 2020.
In the event that the second wave of the Coronavirus pandemic is avoided, it has been predicted by the Organisation for Economic Co-operation and Development (OECD), that the global economy will shrink by 6% in 2020. And if there is a second wave of the New Coronavirus, the global economy will shrink by as much as 7.6%. This was stated in a report released by OECD.
The OECD said…
“Global cooperation to tackle the virus with a treatment and vaccine and a broader resumption of multilateral dialogue will be key for reducing doubt and unlocking economic momentum. The international community should ensure that when a vaccine or treatment is available it can be distributed rapidly worldwide. Otherwise the threat will stay. Likewise, resuming a constructive dialogue on trade would lift business confidence and the appetite for investment.”
A couple of equally probable scenarios were released by OECD. One was in which another Coronavirus outbreak would be avoided. And the other was where the second wave of COVID-19 infections, where there would be renewed lock-downs, will take place before the end of the year 2020.
This report of the OECD was titled ‘World Economy on a Tightrope’. In the report it has been stated that if the second wave of Novel Coronavirus infections does hit the world and governments are thus forced to impose another lockdown, then the result would be that in the year 2020, the economic output of the world will fall to 7.6%. And in 2021, it would climb back to 2.8%.
It has also been forecast by the OECD, that the unemployment rate would almost double to 10% and there would be hardly any recovery in jobs by the year 2021, in the event that the second wave of Coronavirus cannot be avoided.
Laurence Boone, OECD chief economist stated:
“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. 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.”