The coronavirus pandemic may not damage the global economy as badly as previously feared, an influential group says.
The Organization for Economic Cooperation and Development said Wednesday that it now expects worldwide gross domestic product — a key measure of economic health — to drop by 4.5 percent this year, down from its June forecast for a 6 percent plunge.
The decline is still unprecedented as the world faces its worst downturn since World War II, but better-than-expected outcomes in the US and China should help soften the blow from the COVID-19 crisis that brought economic activity to a near-standstill, according to the Paris-based organization.
“The end is not yet in sight but there is still much policymakers can do to help build confidence,” OECD chief economist Laurence Boone said in a statement. “Without continued government support, bankruptcies and unemployment could rise faster than warranted and take a toll on people’s livelihoods for years to come.”
The OECD expects an economic rebound with GDP growing by 5 percent in 2021 — but output in many countries at the end of next year will still be below what it was at the end of 2019, the group said.
The new projections show the US’s GDP falling by 3.8 percent in 2020 and then growing 4 percent next year. The American economy fell into a recession in February and GDP plunged by an annual rate of 31.7 percent in the second quarter, according to federal data, marking the biggest quarterly contraction on record.
China is the only country on the OECD’s list where GDP is expected to rise this year. The group predicts a 1.8 percent increase in 2020 followed by 8 percent growth next year.