For the organism, the level of uncertainty is still very high “and the coronavirus “It will accompany us in the next 12 to 18 months.”
The world’s major economies will end in recession in 2020, except for China, estimated the OECD in its economic outlook published on Wednesday. However, the global recession would be less severe than anticipated thanks to the rapid and consistent reaction of states. On the other hand, the recovery in 2021 will be slower than expected and will need more support.
“Less consumption, less investment, less production, less trade, less employment”: in this way Laurence Boone, chief economist at the Organization for Economic Cooperation and Development (OECD) summarized the world economic situation.
The figures are dizzying: between the end of 2019 and the end of 2021, the world economy could have lost 7 trillion dollars (5.9 trillion euros) “or the equivalent of the combined GDP of Germany and France.”
A deficit that could be reduced to 4 trillion dollars in the best scenario of the evolution of the virus, but that could increase to 11 trillion in the worst.
One thing is for sure: “the level of uncertainty it is still extremely high “and covid-19, which leaves at least 930,000 dead in the world and continues to paralyze Europe,” will accompany us in the next 12 to 18 months. “
Despite this bleak picture, the lesson we can learn from this crisis is that “politics matter”, and that “governments still have a lot of leeway,” added Boone, presenting the OECD intermediate economic outlook.
The Paris-based organization is now betting on a growth of 5% in 2021, after a drop of 4.5% in 2020. In June, it expected a drop of 6% for this year and a rebound of 5.2% for 2021.
The OECD stresses in any case that “these prospects are very uncertain” because they depend “on the assumptions regarding the spread of the virus and the evolution of macroeconomic policies.”
Furthermore, this global figure hides “considerable differences between countries”, between China (+1,8%), which would be the only economy in the panel that will register growth in 2020, and India, where the pandemic arrived later and whose GDP would fall 10.2%.
In 2020, the United States (-3.8%) would finally perform better than expected, and Germany (-5.4%) would do better than the euro zone (-7.9%). France (-9.5%), Italy (-10.5%) and the United Kingdom (-10.1%) would suffer sharp falls and their rebound in 2021 would be less strong than expected by the OECD in June.
However, the OECD is clear: without the rapid and massive reaction of governments, and without the consequent intervention of central banks, “the contraction in activity would have been much more important.”
The world fears a second wave of the pandemic, which has infected 29.6 million people since it became aware of its appearance in China in December, and measures to try to stop it are multiplying. Israel, for example, decided to confine its entire population again. In England a strict limitation to meetings.
The OECD warns that “a stronger resurgence of the virus or stricter containment measures could reduce world growth by 2 to 3 percentage points in 2021.”