Paris – The Organisation for Economic Cooperation and Development (OECD) has warned against the impact of the Covid-19 (coronavirus) outbreak on the global economy.
In a report published 2 March, the Paris-based international organisation said the world economy was at risk, calling on governments to “act now” to minimise the potential impact of the outbreak.
“The global economy faces its biggest danger since the financial crisis. Containing the epidemic and protecting people is the priority,” said the OECD report.
The report explored two scenarios for the disease outbreak, stating that in the best-case scenario, there would be a "temporary blow" to the world economy.
In this scenario, the OECD predicted that there would be “severe, short-lived downturn in China, where GDP growth falls below 5% in 2020 after 6.1% in 2019.”
Here, the Chinese economy is expected to recover to 6.4% rate of growth in 2021.
In Japan, Korea, and Australia, growth will also be hit hard, followed by gradual recovery.
The best-case scenario foresees “less severe” impact on other economies, despite a drop in confidence and supply chain disruption.
In its “domino scenario”, however, the OECD predicted a broader contagion and a “longer lasting and more intensive outbreak spreading through the Asia Pacific region, Europe and North America.”
Here, global growth could drop to 1.5% in 2020, half the rate projected before the virus outbreak.
Recovery will also be “much more gradual” through 2021 in this scenario.
The OECD has called on governments to increase resources in the health sector and support the most vulnerable, ensure liquidity buffers for affected industries worldwide and coordinate health responses, monetary and fiscal support across countries.