Global GDP forecast improves thanks to government coronavirus responses

The outlook for global economic growth has improved since June because of the significant coronavirus relief efforts from governments around the world, according to a new report released on Wednesday.

Global gross domestic product is projected to fall by 4.5% this year, before picking up to 5% in 2021, according to a report by the Organization of Economic Cooperation and Development.

That projection is an improvement over the June forecast for a 7.6% contraction of the global economy if a second wave of the virus triggered shutdowns and a 6% slump if the second wave was avoided.

The organization attributed the difference to better-than-expected outcomes for China and the United States and responses by governments “on a massive scale.”

“The world is facing an acute health crisis and the most dramatic economic slowdown since the Second World War,” said Laurence Boone, the OECD’s chief economist. “The end is not yet in sight, but there is still much policymakers can do to help build confidence.”

Despite the positive projections, the OECD’s latest projections showed that output at the end of 2021, in many countries, will still be below the levels at the end of 2019 and well off the pre-pandemic trend.

The report also added that a strong surge in the virus or harsher lockdowns could cut 2 to 3 percentage points from global growth in 2021, along with even higher unemployment and an extended period of low investment.


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