In its latest global economic outlook, the OECD predicted Britain’s economy was likely to slump by 11.5 percent in 2020. But it warned that if there was a second peak of the COVID-19 pandemic, the UK economy could contract by 14 percent this year.
The global economy will suffer the biggest peace-time downturn in a century before it emerges next year from a coronavirus-inflicted recession, the OECD said on Wednesday.
Updating its outlook, the Organisation for Economic Cooperation and Development (OECD) forecast the global economy would contract 6.0 percent this year before bouncing back with 5.2 percent growth in 2021 – providing the outbreak is kept under control.
However, the Paris-based policy forum said an equally possible scenario of a second wave of contagion this year could see the global economy contract 7.6 percent before growing only 2.8 percent next year.
OECD chief economist Laurence Boone wrote in an introduction to the refreshed outlook: “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.”
UK economy hardest hit by COVID as global outlook shows biggest peacetime drop in 100 years
The OECD warned that if there was a second peak of the COVID-19 pandemic, the UK economy could contr
With crisis responses set to shape economic and social prospects for the coming decade, she urged governments not to shy away from debt-financed spending to support low-paid workers and investment.
Ms Boone said: “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.”
As the threat of a second wave of contagion keeps uncertainty high, Ms Boone said now was no time to fan the flames of trade tensions and governments should cooperate on a treatment and vaccine for the virus.
OECD chief economist Laurence Boone said the outlook could have dire and long-lasting consequences.
The US economy, the world’s biggest, is seen contracting 7.3 percent this year before growing 4.1 percent next year.
In the event of a second outbreak, the U.S. recession would reach 8.5 percent this year and the economy would grow only 1.9 percent in 2021, the OECD said.
Meanwhile, the euro area is heading for a downturn of 9.1 percent this year followed by 6.5 percent growth next year. But the recession could reach 11.5 percent this year in the event of a second outbreak, followed by growth of 3.5 percent in 2021.
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