Sun, May 19, 2024

OECD and the State of the Global Economy

oecd, Economic impact of the coronavirus pandemic

Countries around the world are struggling to adapt to the new reality created by the coronavirus pandemic. On Wednesday, the Organization for Economic Cooperation and Development made an important announcement connected with the global economy. The coronavirus pandemic is on track to cause the worst recession outside of wartime in 100 years according to OECD.

Importantly, strict lockdowns as well as travel restrictions imposed by countries around the world affected the business activity. Moreover, coronavirus disrupted global supply chains. Unfortunately, there are other issues as well. For example, inequality and debt levels soared and confidence levels fell this is bad news.

The Economic Outlook published by OECD contains interesting details about the state of the global economy. According to the Economic Outlook, the economic impacts of the coronavirus pandemic are dire all around the world.

Moreover, the recovery will be slow and this is not the end of the story. The crisis will have long-lasting effects. Also, it will create the biggest challenges for the most vulnerable people. People shouldn’t forget about uncertainty. Hopefully, the organization expects economic activity to pick up in the coming months.

The global economy and two scenarios

OECD and its forecasts

It is worth mentioning that the organization published two forecasts for global growth. Let’s have a look at the forecasts to learn more about the global economy. The first forecast is based on the assumption that the second wave of the coronavirus pandemic will affect the economy. The second one is more optimistic. According to the second forecast, the second wave won’t influence the economy as it assumes that it will be possible to avoid the second wave.

According to the first scenario, global growth will contract by 7.6% in 2020. Moreover, global growth will remain far away from its pre-crisis level by the end of next year.

Moreover, if there is no second wave, the global economy will still contract by 6% in 2020. However, the economy will recover to almost pre-crisis levels by the end of 2021.

Importantly, France the United Kingdom, Italy, and Spain are expected to face the sharpest economic contractions in 2020. The countries mentioned above suffered more serious damage compared to other countries due to the health crisis.

Nevertheless, the organization expects growth in the United States to contract by 7.3% in the single-hit scenario. However, if there is a second wave, the OECD expects growth to fall by 8.5%. The U.S. has the largest economy in the world but even for the economic superpower, it will take time to get the economy back on track.

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