Second round of coronavirus lockdowns would plummet global economy by 7.6 pc: OECD

Paris: A second wave of the coronavirus pandemic, which would require another set of lockdowns to be put in place, would plummet the global economy by 7.6 percent this year, said the Organisation for Economic Cooperation and Development (OECD) on Wednesday.

As the rapidly-spreading coronavirus forced countries to shut their economies from March onwards, another set of lockdowns will result in contraction of the economy on a much bigger scale, as per the latest report on the global outlook by the OECD.

With the return to lockdowns, the world economic output is forecast to contract by 7.6 percent this year, before climbing back to 2.8 percent in 2021. At its peak, unemployment in the OECD economies would be more than double the rate prior to the outbreaks, with little recovery in jobs next year, The Wall Street Journal reported.

“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,” OECD Chief Economist Laurence Boone was quoted as saying.

In the US, the OECD expects the economy to shrink by 7.3 percent this year, rebounding by 4.1 percent next year if a second wave is avoided. If it is not, this year’s contraction is expected to be 8.5 percent and next year’s rebound to be 1.9 percent.

Last week, the Congressional Budget Office, a nonpartisan legislative agency, had forecasted that the economy would contract by 5.6 percent this year.

The research body sees larger declines in output in some European economies. For the eurozone, it forecasts a drop in the gross domestic product of 9.1 percent this year, to be followed by a rebound of 6.1 percent in 2021 if there is no second wave. Should there be a resurgence in the pandemic, it projects a contraction of 11.5 percent followed by a rebound of 3.5 percent.

While many other economists expect China, which is the world’s second-largest economy, to grow modestly this year, the OECD’s forecasters expect to see a contraction of 2.6 percent, to be followed by an expansion of 6.8 percent in 2021.

If the country were to suffer a second wave, the contraction would deepen to 3.7 percent and the rebound amount to 4.5 percent, the OECD said.

Boone suggested that countries need to focus more on economic activities that are likely to grow such as electronic commerce.

Source: ANI