The Organisation for Economic Co-operation and Development downgraded its global growth outlook on Monday, saying the impact of the Covid-19 outbreak on economic prospects is set to be severe.
The Paris-based think tank lowered the global growth projection for this year by 0.5 percentage points, while prospects for China was revised down markedly, with growth seen slipping below 5 percent this year.
In the Interim Economic Assessment, the OECD said global GDP growth is projected to drop to 2.4 percent in 2020 from an already weak 2.9 percent in 2019. The forecast for 2021 was trimmed to 3.3 percent from 3.6 percent.
The OECD urged governments to act swiftly and forcefully to overcome the coronavirus and its economic impact. If downside risks materialise, and growth appears set to be much weaker for an extended period, then co-ordinated multilateral actions should be taken, the agency added.
China’s economy is projected to expand 4.9 percent this year versus the previous forecast of 5.7 percent, before recovering to over 6 percent in 2021.
The adverse impact on confidence, financial markets, the travel sector and disruption to supply chains contributes to the downward revisions in all G20 economies in 2020, particularly ones strongly interconnected to China, such as Japan, Korea and Australia.
Although the effects of the coronavirus outbreak on the US and Canada are projected to be relatively mild, the decline in confidence, disruption to supply chains and weaker external demand will moderate growth prospects, the OECD said.
The US GDP is forecast to grow 1.9 percent this year and 2.1 percent next. Canada is expected to expand 1.3 percent in 2020 and 1.9 percent in 2021.
Growth in the 19-nation bloc, the euro area is projected to ease to 0.8 percent this year, before bouncing back to 1.2 percent in 2021. Italy’s GDP is seen flat this year and to grow 0.5 percent in 2021.
The UK is forecast to grow 0.8 percent each in 2020 and 2021.
India’s growth projection was trimmed sharply by 1.1 percentage points to 5.1 percent this year and the outlook for next year to 5.6 percent.
Growth forecast for Australia was lowered to 1.8 percent this year. The economy is expected to advance 2.6 percent next year.
Japan GDP is expected to grow only 0.2 percent in 2020 and 0.7 percent in 2021.
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