UK economy hardest hit by COVID – global outlook shows biggest peacetime drop in 100 years

UK economy hardest hit by COVID – global outlook shows biggest peacetime drop in 100 years

In its latest global economic outlook, the OECD predicted Britain’s economy was likely to slump by 11.5 percent in 2020. But it warned that if there was a second peak of the COVID-19 pandemic, the UK economy could contract by 14 percent this year.

The global economy will suffer the biggest peace-time downturn in a century before it emerges next year from a coronavirus-inflicted recession, the OECD said on Wednesday.

Updating its outlook, the Organisation for Economic Cooperation and Development (OECD) forecast the global economy would contract 6.0 percent this year before bouncing back with 5.2 percent growth in 2021 – providing the outbreak is kept under control.

However, the Paris-based policy forum said an equally possible scenario of a second wave of contagion this year could see the global economy contract 7.6 percent before growing only 2.8 percent next year.

OECD chief economist Laurence Boone wrote in an introduction to the refreshed outlook: “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.” 

With crisis responses set to shape economic and social prospects for the coming decade, she urged governments not to shy away from debt-financed spending to support low-paid workers and investment.

Ms Boone said: “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.”

As the threat of a second wave of contagion keeps uncertainty high, Ms Boone said now was no time to fan the flames of trade tensions and governments should cooperate on a treatment and vaccine for the virus.

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Published at Wed, 10 Jun 2020 11:30:00 +0000