Organization: The global recession will be less than expected this year

The Organization for Economic Cooperation and Development (OECD) predicted on Wednesday that the global recession this year will be less than expected thanks to the efforts made by countries to limit the repercussions of the Covid-19 pandemic.

But the recovery next year will also be less than expected, according to the organization, which estimated that the contraction of global economic output will reach 4.5 percent. It expects a return to 5.0 percent growth in 2021.

In its previous forecast in June, the Paris-based organization said it expects an economic recession of at least 6.0 percent in 2020 and a return to growth of 5.2 percent next year.

And I warned at the time that this recession may, in the long run, stand as a barrier to waves of immigration, especially economic migration to rich countries, which may, in turn, witness a rise in asylum applications.

The organization said Wednesday that "after the initial recovery in many activities following the easing of the closure measures, some indications are emerging from studies of commercial activities that the pace of the global recovery has lost momentum since June, especially in many developed economies."

However, she pointed out that "the economic outlook remains exceptionally mixed, while the Covid pandemic continues to inflict great losses on economies and societies."

In the second quarter of 2020, global output fell by more than 10 percent compared to the end of 2019, a "sudden shock unprecedented in the modern era."

The size and timing of the crisis varied in various large economies, but all of them witnessed a significant contraction of activities amid imposing necessary measures to curb infection.

Global trade collapsed and declined by more than 15 percent in the first half of 2020, and labor markets were severely disrupted by cuts in working hours, job losses and forced closings of business activities.

The organization said that "had it not been for the immediate and effective support for measures that were applied in all economies to mitigate the impact of the shock on household and corporate income, the contraction in production and jobs would have been much greater."

And on each economy separately, China is likely to be the only country to record growth in 2020, which is expected to reach 1.8 percent.

On the other hand, India's economy will contract by 10.2 percent.

As for the United States, the world's largest economy, it will do better than the global average, with expectations of a 3.8 percent contraction this year.

Germany will record better numbers than the euro area as a whole, with the economy expected to shrink by 5.4 percent, compared to a 7.9 percent contraction for the single currency area.

The French economy is expected to record a contraction of 9.5 percent, the Italian economy 10.5 percent, and the British economy 10.1 percent, according to the Organization for Economic Cooperation and Development.

The organization said that future growth prospects will depend on factors including the severity of new virus outbreaks, the type of restrictions imposed, the distribution of the vaccine, and the implications of fiscal and monetary policy measures on demand.


 

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