The Organisation for Economic Cooperation and Development upgraded its global economic forecast for 2020 as output picked up swiftly following the easing of coronavirus confinement measures and the initial re-opening of businesses.
According to the interim report, released Wednesday, the global economy will shrink 4.5 percent this year instead of 6 percent fall estimated in June. Meanwhile, the growth projection for 2021 was revised down to 5 percent from 5.2 percent.
The Paris-based agency noted that without the prompt and effective policy support introduced in all economies, the contraction in output would have been substantially larger.
However, the agency cautioned that the economic outlook remains exceptionally uncertain, with the Covid-19 pandemic continuing to exert a substantial toll on economies and societies.
The report masks considerable differences across countries, with upward revisions in China, the United States and Europe amid weaker-than-expected outcomes in India, Mexico and South Africa.
The US 2020 GDP was forecast to fall 3.8 percent, which was revised sharply from -7.3 percent projected in June. The growth outlook for next year was lowered to 4 percent from 4.1 percent.
At the same time, China’s GDP is expected to grow 1.8 percent versus previous forecast of -2.6 percent. In 2021, growth outlook was lifted to 8 percent from 6.8 percent.
The OECD observed that China’s activity returned quickly to pre-pandemic levels by the end of the second quarter, fuelled by strong infrastructure investment.
Eurozone GDP is seen falling 7.9 percent this year before expanding 5.1 percent in 2021. In June, the OECD had forecast a 9.1 percent fall in 2020 and 3.7 percent growth for next year.
Meanwhile, India’s GDP outlook was revised down sharply to -10.2 percent from -3.7 percent projected in June. But growth is expected to rebound 10.7 percent next year, which was revised up by 2.8 percentage points.
The agency upgraded the fall in UK GDP to -10.1 percent from 11.5 percent this year, while growth forecast for 2021 was lowered to 7.6 percent from 9 percent.
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