Unprecedented decline: Global economy expected to contract 4.5% this year

After collapsing in the first half of 2020, global economic output is recovering following the easing of measures to contain COVID-19 and the initial re-opening of businesses. However, a sharp annual decline is still expected.

That’s according to a new report published on Wednesday by the Organization for Economic Cooperation and Development (OECD). It said that the world economy will contract by 4.5 percent this year, which is an upward revision from a six percent fall estimate made in June. 

“The drop in global output in 2020 is smaller than expected, though still unprecedented in recent history,” said OECD, adding that it expects the global economy to grow by five percent in 2021. Still, the outlook “remains exceptionally uncertain” due to the pandemic.

“Output picked up swiftly following the easing of confinement measures and the initial re-opening of businesses, but the pace of the global recovery has lost some momentum over the summer months,” OECD said, warning of “considerable differences” across different countries.

According to the organization, China, the United States and the euro area are expected to perform better than originally forecast in June. China – the only country among the OECD estimates that’s expected to experience growth this year – is projected to grow by 1.8 percent. Meanwhile, the US economy is set to contract by 3.8 percent and the eurozone by 7.9 percent.

The OECD has also worsened growth expectations for India, Argentina, the UK, Mexico and South Africa, whose economies are forecast to contract by more than ten percent.

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