The Organization for Economic Cooperation and Development (OECD) says the global economy is on track for an “unprecedented decline” in output this year due to the global pandemic.
In its latest economic outlook, the OECD said the world economy will contract by 4.5% this year — an upward revision from an estimate made in June that pointed to a 6% contraction in gross domestic product (GDP). Going forward, the OECD expects the global economy to grow by 5% in 2021.
The Paris-based institution, an intergovernmental body that aims to stimulate economic development, also warned of “considerable differences” across various countries. China, the United States and the Eurozone are expected to perform better than originally forecast. In comparison, growth expectations for India, Mexico and South Africa have worsened.
China is seen growing by 1.8% in 2020 — the only country among the OECD estimates that’s expected to experience growth. By contrast, the U.S. economy is forecast to contract by 3.8% and the Euro area by 7.9%. The picture is even more dire for India, Argentina, the U.K., South Africa and Mexico, which are all forecast to collapse by more than 10%.
Hard-hit economic sectors, such as the travel and tourism industries, have not fully recovered from the strict lockdown measures imposed earlier this year. Many countries are grappling with a resurgence in the number of infections. As a result, authorities might introduce new restrictions in the coming weeks to contain new waves of the COVID-19 virus — which would add further pressure on the global economy.