The Organisation for Economic Co-operation and Development (OECD) has released its latest Economic Outlook, which suggests that it will be no sooner than end of 2021 that the global GDP reaches the pre-pandemic levels.
The way global and local economies will behave depends on various factors, including the speed of Covid-19 vaccination rollout and the tenacity of health and financial policies. If implemented effectively, these factors will lift global GDP by 4.2% in 2021 after a fall of 4.2% this year.
The bounce-back, according to the report, will be strongest in Asia. A graph proposing GDP projections for various nations and areas showed that China was the only nation on the list to enjoy real GDP growth in 2020, with 1.8%, 8% in 2021 and 4.9% in 2022.
In comparison, the United States, having suffered a 3.7% drop in 2020, is set to achieve 3.2% and 3.5% real GDP growth in 2021 and 2022 respectively.
The United Kingdom, compared to most countries on the Outlook’s graph, got affected more heavily suffering a GDP reduction of 11.2% in 2020, with only Argentina showing worse results – 12.9% drop.
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— Eric Feigl-Ding (@DrEricDing) December 1, 2020
Despite the bleak outlook in terms of GDP growth in 2020, the OECD report projects a rise, provided the prospect of vaccines and better virus management.
Although the OECD Chief Economist Laurence Boone, Secretary-General Angel Gurría said on Tuesday there was hope, she added that the “situation remains precarious, especially for the low-skilled and for struggling small businesses.”
“Governments have been vindicated in the support they provided to shield people and firms. With rock-bottom interest rates expected to persist, governments can and need to sustain it to prevent long-term scarring effects of this crisis. The economic consequences will be with us for years to come. Governments must address decisively the effects on the most vulnerable, especially children and the young,” she added.
In order to overcome the damage to economy by the coronavirus pandemic on economic, the OECD called on policymakers to secure action in the following areas:
- Strengthen public health services by investing in health workers, prevention strategies and capacity. Implement effective test, trace and isolate programmes. Start planning vaccination campaigns now. Co-ordinate internationally to ensure affordable vaccines and treatments are available wherever needed.
- Support the vulnerable by expanding social safety nets and improving training for youth and the low-skilled. Ensure that children from disadvantage backgrounds are equipped for the digital age to give them equal opportunities.
- Support businesses by providing grants and equity rather than loans adding to existing debt. Assist companies to invest in their future by, for instance, facilitating the adoption of digital technology.
In that, despite a high degree of uncertainty, quicker and more certain recovery awaits countries with effective testing, tracking and isolation programmes and vaccination programmes.
The Outlook suggests that the Chinese economy will grow strongly and will account for over one-third of world economic growth in 2021.
The OECD economies will only partially recover from the 2020 crisis, growing at 3.3% in 2021. In comparison, European and North American economies will contribute to global growth in a smaller way in proportion to their weight in the world economy.