Prepare for worst peacetime recession – OECD warns

The Organisation for Economic and Social Development (OECD) yesterday raised the alarm that the world would  witness the worst economic recession in a century due to the effect of COVID-19 pandemic.

Consequently, it warned world leaders to prepare for the world worst peacetime recession in a century.

“That applies even if the virus continues to recede. But the economic outcome will be much worse if the second wave of rapid contagion arises later in the year,’’ the inter-governmental think tank warned.

According to the OECD, it is taking the unusual step of publishing a double set of predictions in the latest edition of its twice-yearly Economic Outlook.

The world body added that it had been a best-case scenario for a worldwide single wave of COVID-19, and a worst-case scenario of a widespread second wave.

“In the single-hit scenario, world gross domestic product (GDP) is forecast to decline by 6 per cent this year, however, it will rise by 5.2 per cent by 2021 to return to 98.9 per cent of its 2019 level.

“In the two-wave scenario, global GDP is projected to decline by 7.6 per cent this year, recovering by only 2.8 per cent next year to reach 95 per cent of its 2019 level.

“Even in the more favourable scenario, in many advanced economies, the equivalent of five years or more of per capita real income growth could be lost by 2021,” the OECD warned.

OECD chief economist, Laurence Boone, stated that ultra-accommodative monetary policies and higher public debt are necessary and would be accepted as long as economic activity and inflation are depressed, and unemployment is high.

Sunnews