The OECD released its interim Economic Outlook report on Wednesday, providing us with an updated look at the coronavirus pandemic’s effect on the world economy. Striking a slightly more positive tone than the previous edition published in June, the report finds that “economic output recovered swiftly following the easing of measures to contain the COVID-19 pandemic and the initial re-opening of businesses.” However, it also notes that the “pace of recovery has lost momentum over the summer,” adding that restoring confidence will be key to successful economic recovery.
The OECD expects all G20 countries except China to fall into recession this year, with a swift but fragile recovery projected for 2021. As the following chart shows, the OECD expects global GDP to return to its pre-pandemic level by Q3 2021, however, economic output is expected to remain below late-2019 levels in many countries, not to mention the levels projected before the pandemic hit. The report also notes that uncertainty remains high and that the strength of the recovery depends on numerous variables, resulting in an upside and a downside scenario, also displayed in our chart.
“Prospects for an inclusive, resilient and sustainable economic growth will depend on a range of factors,” the report finds. These include “the likelihood of new outbreaks of the virus, how well individuals observe health measures and restrictions, consumer and business confidence, and the extent to which government support to maintain jobs and help businesses succeeds in boosting demand.” All things considered, the OECD projects global GDP to fall by 4.5 percent this year before growing 5 percent in 2021.