The global economy will contract at least six percent this year before bouncing back with 5.2 percent growth in 2021 if the coronavirus outbreak is kept under control, the Organization for Economic Cooperation and Development (OECD) said Wednesday, warning that recovery will be “slow and uncertain.”
Updating its outlook, the OECD forecast that if a second wave of contagion happen later in the year, world economic output could shrink by as much as 7.6 percent in 2020, which would be followed in 2021 by GDP growth of between 2.8 and 5.2 percent.
“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,” the Paris-based policy forum said in its latest outlook.
With crisis responses set to shape economic and social prospects for the coming decade, it urged governments not to shy away from debt-financed spending to support low-paid workers and investment.
“Ultra-accommodative monetary policies and higher public debt are necessary and will be accepted as long as economic activity and inflation are depressed, and unemployment is high,” OECD chief economist Laurence Boone said.
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