OECD Economics Outlook, interim report march 2020

Coronavirus: the world economy at risk

 
 

The impact of the Covid-19 outbreak on economic prospects is severe

Growth was weak but stabilising until the coronavirus Covid-19 hit. Restrictions on movement of people, goods and services, and containment measures such as factory closures have cut manufacturing and domestic demand sharply in China. The impact on the rest of the world through business travel and tourism, supply chains, commodities and lower confidence is growing.

Base scenario: temporary blow
  • Severe, short-lived downturn in China, where GDP growth falls below 5% in 2020 after 6.1% in 2019, but recovering to 6.5% in 2021.
  • In Japan, Korea, Australia and Indonesia, growth also hit hard then gradual recovery.
  • Impact less severe in other economies but still hit by drop in confidence and supply chain disruption.
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  • Intensity of China impact repeated in northern advanced economies severely hitting confidence, travel, and spending.
  • Global growth is halved to 1.5% in 2020.
  • Recovery much more gradual through 2021.
Domino scenario: broader contagion
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  • Help health care sector, affected industries and workers, boost investment to accelerate recovery.
  • If epidemic spreads, coordinate international action .
  • Protect affected workers’ health and income; buffer the shock through tax and credit charge easing and flexible working.
Governments must act now
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Real GDP Forecast
GDP Growth Projection, %, year on year, 2019 and 2020

Watch live press conference with Laurence Boone, OECD Chief Economist

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Presentation Economic Outlook

The global economy faces its biggest danger since the financial crisis. Containing the epidemic and protecting people is the policy priority.

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