OECD: Global economy on the rebound
Thursday, September 17th, 2020
- Amid high uncertainty and acceleration of economic activities at different patterns across the countries, OECD called on governments to act more to help build confidence.
- Need to provide flexible and more targeted fiscal, financial and other policy support and avoiding the mistake of tightening fiscal policy too quickly.
The global economy is projected to shrink 4.5 per cent in 2020 from the year before, the Organisation for Economic Co-operation and Development (OECD) has said, upgrading the previous forecast due to the gradual recovery from a slump caused by the coronavirus (Covid-19) pandemic.
The Paris-based organisation expects the world economy to bounce back in 2021, projecting a 5 per cent expansion, but warned “a stronger resurgence of the virus, or more stringent containment measures, could cut 2 to 3 percentage points from global growth in 2021.”
The latest upgrading of the projection for the global economy in 2020 resulted from a “sharper-than-expected” rebound in China, whose estimated gross domestic product (GDP) figure this year was modified from a 2.6 per cent contraction to 1.8 per cent growth, and some other upward revisions in developed nations.
“The forecasts are less negative due primarily to better than expected outcomes for China and United States in the first half of this year and a response by governments on a massive scale,” OECD said in its latest interim economic outlook.
Chinese economy is expected to see an 8 per cent jump in 2021, revised upward from 6.8 per cent growth.
The easing of containment measures and the initial re-opening of businesses had also contributed to faster recovery, it added, noting that new restrictions being imposed in some countries to tackle the resurgence of the virus would likely slow the growth pace.
The OECD has projected 1.8 per cent growth in China this year. United States was seen performing better-than-expected with a 3.8 per cent contraction in 2020, far better than the previous estimate of -7.3 per cent.
However, “prospects for an inclusive, resilient and sustainable economic growth will depend on a range of factors including the likelihood of new outbreaks of the virus, how well individuals observe health measures and restrictions, consumer and business confidence, and the extent to which government support to maintain jobs and help businesses succeed in boosting demand,” the OECD stated in the report. –Agencies