The OECD forecasts 6% - 7.6% drop in global GDP in 2020

The world economy is experiencing its worst recession since the 1930s with a 6% drop in activity by 2020 if there is no resurgence of the pandemic, and 7.6% if that happens by the end of the year. This is the double scenario outlined by the Organisation for Economic Cooperation and Development (OECD) in its half-yearly economic outlook published on Wednesday, which is marked by exceptional uncertainty and in which the euro zone appears to be the region that comes out worst. 

The countries of the European single currency as a whole will suffer a 9.1% cut in their gross domestic product (GDP) in 2020 if the pandemic is kept at bay, but in the worst-case scenario the drop would be 11.5%. Within this group, the particularly negative situation of Italy, France and Spain stands out, which in the scenario of a second outbreak could suffer a recession of at least 14% in 2020. All three are characterized by having been affected by the pandemic from an early stage, by having applied particularly strict containment measures that have paralyzed productive activities and consumption for many weeks, and by having a significant tourism sector, now being severely punished.

The United Kingdom is in a similar situation, with a high relative weight of the service sector which is being greatly harmed by containment, distancing measures and the suspension of travel. The collapse of its GDP could also reach 14%. Although at a distance from this group, the drop in activity in the United States will also be very significant, 7.3% or 8.5% if one or the other working hypothesis is met. 

None of the world's major economies will escape recession this year, but China -the country from which the coronavirus was dispersed- will be by far the least affected (-2.6% and -3.7% in the two scenarios considered). And it will also be one of the few countries that in 2021 will largely recover lost ground (+6.8% and +4.5%, respectively), along with India. 

The authors of the report indicate that, although overall growth is expected next year, which will be more vigorous if there is not a new blow from the pandemic in the coming months, this will not allow a return to pre-crisis levels of activity by the end of 2021. 

In practice, by the end of next year, the loss of income will be greater than that of any other recession in the last 100 years, if periods of war are excluded. And the shock will continue to have long-term consequences for people, businesses and governments. The agency's chief economist, Laurence Boone, explains that confinement has exacerbated inequalities between workers, especially those who have been able to telework, who are generally the most highly skilled, and others in precarious situations.

For the OECD, public investments in green and digital technologies to transform the economy are now even more urgent than before the crisis to accelerate the transformation of companies and workers who will have to retrain. Confidence-building measures are also needed within each country, to stimulate consumption, but also at the international level at a time of strong tensions between the two major world economies, the United States and China. 

Boone stresses that the international community would have to ensure that whenever a vaccine or treatment against COVID-19 is available it will be rapidly distributed around the world and that, in parallel, there must be a dialogue on trade to restore business and investment confidence.