In the Face of a historic recession, the OECD is calling for an economy that is “more just and more sustainable”

Face une récession historique, l'OCDE appelle à une économie «plus juste et plus durable»

PARIS | The global economy should experience a recession this year, at least 6%, which will aggravate the inequality, according to the OECD, which calls on governments to modernise and to cooperate for the realisation of an economy that is more just and more sustainable”.

In its first global economic prospects since the pandemic was brought to its knees all the major economies of the world, the Organization of economic cooperation and development, faces a “uncertainty extraordinary” has constructed two scenarios: one where the epidemic of COVID-19 “remains under control”, and the other where it starts with a second wave.

In the first case, the gross domestic product (GDP) worldwide will decline in 2020 from 6 %, in the second 7.6 %. In 2021, it will bounce according to the case of 5.2 %, or only 2.8 % if the coronavirus begins to circulate, with what that implies of containment and / or quarantine.

At the beginning of march, so that the coronavirus had already hit China, but not yet the other major economies of the world, the OECD forecast a simple settlement at 2.4 % global growth for the current year.

In three months everything has changed.

That whether or not there is a second epidemic wave, “at the end of 2021, the loss of income will exceed that of all previous recessions over the last hundred years except in times of war, with terrible consequences and long-lasting for people, enterprises and governments,” says the chief economist of the OECD, Laurence Boone.

Integration to fragmentation

“Everywhere, the containment has reinforced the inequality between the workers” qualified to telecommute and less qualified “often on the front line” in the fight against the pandemic, she said.

The COVID-19 has also “accelerated the failover of a “greater integration” to a “greater fragmentation” of the world economy with the appearance of additional restrictions to trade and investment”, note again Ms. Boone.

The euro area will be particularly affected with a decline in the gross domestic product (GDP) is expected to be 9.1 % in the best-case scenario, and 11.5 % in the case of the second wave in 2020.

France is a part, with Italy and Spain, the countries hardest hit: GDP is expected to decline in france, 11.4 % in 2020, and even 14.1 % in the case of the second wave. 2021 should, however, bring a strong rebound of 7.7 % if the epidemic there, and all the same, from 5.2% in the case of a return of the virus.

For the United States, the OECD expects a decline in GDP of 7.3%, or 8.5 %, depending on the scenario.

China, world’s second largest economy behind the United States and still champion of the growth last year, with 6.1 %, will see it also its economy will contract 2.6 %, or of 3.7% this year if the virus is reborn massively.

In the third place, Japan will be hit by a recession of 6 % in the favourable scenario, and 7.3% if the epidemic starts again.

Restore confidence

To enable economies to recover, the OECD recommends to “strengthen health systems”, “to facilitate the evolutions of the business while strengthening the protection of the revenue”, and “make supply chains more resilient”.

“The government must seize this opportunity to design an economy that is more just and more sustainable, make the competition and the regulations smarter, modernize the taxation, spending and social protection”, calls Laurence Boone.

It points to the essential role of trust, without which neither the consumption nor the investment will not restart.

But “the barriers to trade and threats to supply chains also reduce the decrease of the uncertainty, necessary for the investment to resume” – leading economist at the time where the hopes of pre-crisis regulation of the trade conflict, the sino-american evaporate.

Finally, “the international community should ensure that when a vaccine or treatment will be available it will be distributed rapidly throughout the world,” asked Mrs. Boone, because “otherwise, the threat will persist”.

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