The Organisation for Economic Co-operation and Development said in a report today the global recession prompted by Covid-19 containment measures is the worst in nearly a century. The Paris-based group said the global economy won’t recover to fourth-quarter 2019 levels for two years — whether there is a second wave of infection or not. However, things will worsen if a second wave occurs.
While containment measures were necessary to slow virus and limit the death toll, they have caused widespread economic hardship, widened inequality, disrupted education and undermined confidence in the future, according to the OECD.
Two economic scenarios were described by the OECD’s report, one with a second wave of infections and one without.
Double hit: A second wave of infections hits before the end of the year:
- There is a return to lockdowns.
- Global economic outlook plummets 7.6% this year before climbing back 2.8% in 2021.
- The OECD unemployment rate nearly doubles to 10% with little recovery in jobs by 2021.
Single hit: No second wave
- Global economic activity falls 6% in 2020 and OECD unemployment climbs to 9.2% from 5.4% in 2019.
- While living standards will fall less sharply than with a second wave, five years of income growth will be lost across the economy in 2021.
Europe will be particularly hard hit by the lockdowns.
“Euro area GDP is expected to plunge by 11.5% this year if a second wave breaks out, and by over 9% even if a second hit is avoided, while GDP in the United States will take a hit of 8.5% and 7.3% respectively,” according to the OECD.