The COVID-19 pandemic triggered one of the most serious global recessions in almost a century and will leave scars in the world for many years, the Organization for Economic Co-operation and Development (OECD) warned on Wednesday.
The Paris Political Forum took a rather unusual step in its latest update of the global economy, proposing two forecasts of global growth: first assuming the second coronavirus will arrive at the end of half of 2020; Second, strict measures of social distance may be sufficient to avoid new cases of the virus and death.
If a second outbreak occurs, the OECD predicts that global growth will fall by 7.6% in 2020 and will “remain low” compared to the level of growth activity since 2019, which suggests the absence of a V-shaped recovery. If the second wave can be avoided, the OECD predicts that the global economy this year will still decline by 6% and by the end of 2021 will not be able to recover again to the pre-crown level.
“Both scenarios are sobering because economic activity is not recovering and cannot return to normal life in these circumstances,” writes OECD chief economist Lawrence Boone.
Boone added that “most people see a V-shaped recovery, but we think it will stop halfway. By the end of 2021, revenue losses will exceed the losses of any previous recession over the past 100 years outside of wartime, with dire and lasting consequences for people, firms and governments. ”
“When you re-open sectors that can function almost normally, you obviously get a surge of activity, but since the virus is spread elsewhere or not eliminated in our countries, then some borders remain closed, some mobility will be difficult, and some sectors not can function as entertainment or public events, “she continued.
The report said the US economy is expected to contract 7.3% this year, and then recover with a 4.1% growth in 2021. If a second wave of viruses appears, the US economy will shrink by 8.5% this year and grow only 1.9% next year. year.
As for Europe, a decline of 9.1% is projected this year, and next year the growth will be 6.5%. But if the second wave of the virus appears, the recession may deepen to 11.5% this year, and then next year the growth will be 3.5%.
The OECD has warned of high unemployment among millennials. “Unemployment in the OECD average economy this year is projected to be at its highest level for twenty-five years, and will decline very slowly in 2021,” the statement said.
“Scarring caused by job loss is likely to be felt, in particular, by young and lower-skilled workers, with the associated risk that many people will be trapped in unemployment for a long period.”
There was also concern that emerging economies were taking the brunt of the recession. Latin American countries continue to experience the explosion of viral cases and deaths as economic activity crashes.
President Trump recently said, “We talked about“ V ”- it’s better than“ V ”. It’s a rocket ship, ”referring to jobs and the economy last week.
If the OECD is correct, along with the latter World Bank Report Showing Restrained Recovery Aheadall of this suggests that President Trump’s pumping of the V-shaped recovery is causing great disappointment in the markets, as expectations are too high. But, hey, this is an election year, and Trump has to rock, rock, rock.