The COVID-19 pandemic is a global health crisis without precedent in living memory. It has triggered the most severe economic recession in nearly a century and is causing enormous damage to people’s health, jobs, and well-being.
The OECD Economic Outlook, June 2020 focuses on two equally probable scenarios – one in which the second wave of infections, with renewed lock-downs, hits before the end of 2020, and one in which another major outbreak is avoided.
The lockdown measures brought in by most governments have succeeded in slowing the spread of the virus and in reducing the death toll but they have also frozen business activity in many sectors, widened inequality, disrupted education, and undermined confidence in the future.
As restrictions begin to be eased, the path to economic recovery remains highly uncertain and vulnerable to the second wave of infections. With or without a second outbreak, the consequences will be severe and long-lasting.
The economic impact of strict and relatively lengthy lockdowns in Europe will be particularly harsh. Emerging economies face the challenge of strained health systems adding to difficulties caused by a collapse in commodity prices.
Many countries have introduced support measures to protect jobs in the near-term in hard-hit sectors, but young workers, in particular, are vulnerable.
The global economy is now experiencing the deepest recession since the Great Depression in the 1930s, with GDP declines of more than 20% and a surge in unemployment in many countries. Even in countries where containment measures have been relatively light, early data are already making clear that the economic and social costs of the pandemic will be large. Growth prospects depend on many factors, including how COVID-19 evolves, the duration of any shutdowns, the impact on activity, and the implementation of fiscal and monetary policy support. Uncertainty will likely prevail for an extended period. Given this uncertainty, two scenarios have been developed to reflect the possible evolution of the global economy. In the double-hit scenario, it is assumed that renewed shutdowns are implemented before end of 2020, following another surge of the COVID-19 virus.
Read the OECD Economic Outlook, June 2020.
Original source: OECD
Published on 17 June 2020
