Better-than-expected
recovery in China and the United States, and government stimulus
policy are expected to help limit the global economic
contraction, said the Organization for Economic Cooperation and
Development (OECD) on Wednesday.
The global GDP is
projected to decline 4.5 percent this year, before picking up
five percent in 2021, said the OECD in its interim report. The
projection marks an improvement compared with its June estimates
of a six-percent-contraction this year.
The OECD warned that the
COVID-19 pandemic would continue to exert a substantial toll on
economies and societies, so the economic outlook remains
uncertain.
"A recovery is now under
way following the easing of strict confinement measures and the
re-opening of businesses, but uncertainty remains high and
confidence is still fragile," said the report.
The OECD said growth
prospects depend on many factors, including the magnitude and
duration of new COVID-19 outbreaks, the degree to which current
containment measures are maintained or reinforced, the time
until an effective treatment or vaccine is deployed, and the
extent to which significant fiscal and monetary policy actions
support demand.
Considerable differences
between major economies can be seen, such as upward revisions in
China, the United States and Europe, but weaker-than-expected
outcomes in India, Mexico and South Africa.
Performances in
different indicators also vary. For example, the recovery of
global export orders is weak, which restrained the pace of the
recovery in countries such as Germany, Japan and South Korea.
Unemployment has soared in the United States and Canada, with
lower-wage employees and younger workers being hardest hit.
Sharper-than-expected
recovery takes place in China
China is the only G20
country in which output is projected to rise in 2020, supported
by its rapid control of the coronavirus outbreak and the policy
support driving quick work and production resumption.
The report said China's
economic growth is projected to be 1.8 percent, up from a June
projection of a contraction of 2.6 percent, also the only
positive growth among countries and regions analyzed in the
report.
China's economic
activities quickly recovered to the pre-pandemic levels by the
end of the second quarter. China's value-added industrial output
rose 5.6 percent year on year in August, marking the fastest
gain in eight months. The country's exports climbed 9.5 percent
year on year last month, the strongest gain in 17 months.
Meanwhile, the United
States was projected to perform better than expected with a
3.8-percent contraction in 2020, far better than the previous
estimate of -7.3 percent.
Monetary and fiscal
policy supports need to be maintained
The policy easing
measures taken by central banks since the onset of the pandemic
has been supportive of the economic stabilization and reduction
of government debt serving costs, but the ongoing recovery is
slow and gradual.
Therefore, complementary
fiscal and structural policy measures will be needed to help
restore confidence, demand, and economic dynamism, and tackle
the asymmetric impact of the pandemic across sectors and
households, said the report.
Countries have also
taken substantial fiscal support since the pandemic began in a
bid to prevent a recession. Fiscal measures are still needed in
2021 as the early withdrawal of these measures could hinder
growth, the report warned.
At the same time,
governments need to reassess the balance of support measures,
ensuring that they are well targeted and closely monitored.
In addition,
comprehensive public health interventions remain necessary to
limit and mitigate new outbreaks and reduce uncertainty for
consumers and businesses as uncertainties remain about the
evolution of the pandemic in the next few months, said the
report.
Enhanced global
cooperation and coordination is essential to mitigate and
suppress the virus, speed up recovery and keep trade and
investment flowing freely.
Source: CGTN |