Global recession won’t be as sharp as previously feared: OCED

The OECD, on September 16, informed that the global recession this year won’t be as sharp as previously feared because of countries’ efforts to counter economic fallout from the coronavirus pandemic. The Paris-based institution, however, added that the recovery is losing pace and will need support from governments and central banks for some time. OECD said that the world economy will shrink 4.5 per cent this year, which is less than than the six per cent forecast in June. 

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The Organisation for Economic Co-operation and Development said that recovery next year will also be more modest than anticipated while projecting a contraction of 4.5 per cent in global economic output this year and a return to growth of around five per cent in 2021. 

According to the organisation, the better view reflects the strong economic pickup in recent months. It was noted that the US unemployment rate fell more than forecast in August, while China this week reported positive retail and industrial productions data. Even though the initially strong pick up means that 2020 number looks less grim, OCED said that pace of recovery is now fading, and output in the several countries will still be below its pre-crisis level at the end of 2021. 

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Central banks, governments urged to provide support 

Amid such dangers, OCED said that the governments and central banks will need to continue to provide support into 2021. It also added that the assistance programs must evolve as growth picks up, allowing money to be better targeted at protecting businesses and jobs in sectors with a viable future. 

Furthermore, while the organisation upgraded the global outlook, it also made a huge downward revision to a number of emerging markets. OECD noted that India’s economy will shrink 10.2 per cent this year, which is almost three times the previously forecast. Argentina, Mexico and South America will also suffer more than predicted in June, the organisation said. 

(Image: AP) 

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