OECD analysts predicted a slowdown in global economic growth
The Organization for Economic Cooperation and Development released a report predicting the worst growth for the global economy since the 2009 crisis. The researchers noted that market performance was already volatile due to trade wars and geopolitical issues. Due to the coronavirus, supply chain problems, low demand in commodity markets, and a decline in consumer confidence emerged.
The organization presented two possible scenarios for the development of events. With a successful turn of events, the growth slowdown within this year will reach 2.4%. In the worst case, if the virus spreads to other countries, the effect will be long-term and fraught, and growth will be reduced to 1.5%. Measures to prevent the spread of coronavirus and risks of infection will seriously affect not only production, but also serve as a trigger for a recession in the high-burden states.
Analysts stressed that the slow reaction of the authorities could cost significant losses for the financial sector. Governments must find a compromise between containing the spread of the virus and supporting business and demand. The authors of the report argue that the global economy is too fragile tool to wait for a sharp rebound and subsequent recovery.
Among other things, the organization advised the authorities to support the most vulnerable and affected companies and households. Financial support should make up for the losses of the business from the reduction in revenue and, if possible, help to avoid massive layoffs of employees. An additional preventive measure will be to reduce tax payments and extend loan repayment terms, which will help to eliminate pressure on businesses. The G20 nations must work together to maximize losses to the global economy.