The coronavirus outbreak has brought a major economic disruption plunging the world economy into its most precarious position since the global financial crisis, said the Organisation for Economic Cooperation and Development (OECD). The organisation urged the governments and central bank to actively take measures as the world economy is too fragile to gamble on an automatic bounce-back.
The intergovernmental economic organisation, in its interim economic assessment, has cut down the global GDP growth to 2.4 per cent in 2020 from an already weak 2.9 per cent in 2019. OECD said that the world economy can even report negative growth in the first quarter of 2020 due to factory closures, travel restrictions, and quarantines.
💬 “The #coronavirus risks giving a further blow to a global economy that was already weakened by trade & political tensions.”— OECD ➡️ Better policies for better lives (@OECD) March 2, 2020
Our Chief Economist @LauBooneEco calls on governments to protect people & support the #healthcare system ➡️ https://t.co/Ur8AjvAzzy #EconomicOutlook pic.twitter.com/eC6uNDgp6v
OECD Chief Economist Laurence Boone, in her blog, said that high-frequency indicators such as coal demand suggest the Chinese economy slowed sharply in the first quarter of 2020. She added that the negative spillovers from China to the rest of the world are sizeable. The 50-year-old French economist warned that the slowdown will be sharper and more prolonged as the epidemic breaks out in other parts of the world.
“Increased government spending should be first directed to the health sector, tackling virus outbreaks and supporting research,” suggested Boone.
The OCED said that the adverse impact on confidence, financial markets, the travel sector, and disruption to supply chains contributes to the downward revisions in all G20 economies in 2020, especially those economies that are strongly connected to China, the worst affected country which has reported over 2,900 death due to the deadly virus.
Meanwhile, the United Nations has released $15 million from the Central Emergency Response Fund (CERF) to help fund global efforts to contain the novel coronavirus COVID-19. UN Humanitarian Chief Mark Lowcock announced the release of the fund after the World Health Organisation (WHO) raised the alert to its top level of risk assessment - ‘very high’.