Global recession not as deep as expected: OECD

Global trade collapsed, declining by over 15 percent in the first half of 2020,. (File/AFP)
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Updated 16 September 2020

Global recession not as deep as expected: OECD

  • The recovery next year will also be more modest than anticipated
  • The extent and timing of the pandemic shock differed across the major economies, but all experienced a sharp contraction in activity

PARIS: The global recession this year will not be as deep as expected as a result of countries’ efforts to counter the economic fallout from the coronavirus pandemic, the OECD said on Wednesday.
But the recovery next year will also be more modest than anticipated, the Organization for Economic Co-operation and Development said, projecting a contraction of 4.5 percent in global economic output this year and a return to growth of roughly 5.0 percent in 2021.
In its previous set of forecasts in June, the Paris-based OECD had been expecting the global economy to shrink by 6.0 percent in 2020 and return to growth of 5.2 percent next year.
“After the initial bounce-back in many activities following the easing of confinement measures, there are some signs from high-frequency indicators and business surveys that the pace of the global recovery has lost momentum since June, particularly in many advanced economies,” the OECD said.
It pointed out, however, that “the economic outlook remains exceptionally uncertain, with the Covid-19 pandemic continuing to exert a substantial toll on economies and societies.”
In the second quarter of 2020, global output more than 10 percent lower than at the end of 2019, “an unprecedented sudden shock in modern times,” the OECD said.
The extent and timing of the pandemic shock differed across the major economies, but all experienced a sharp contraction in activity as necessary containment measures were implemented.

Global trade collapsed, declining by over 15 percent in the first half of 2020, and labor markets were severely disrupted by reductions in working hours, job losses and the enforced shutdown of businesses.
“Without the prompt and effective policy support introduced in all economies to cushion the impact of the shock on household incomes and companies, the contraction in output and employment would have been substantially larger,” it said.
Looking at individual economies, China was expected to be the only one to expand in 2020, with projected growth of 1.8 percent.
India, on the other hand, would see its economy shrink by 10.2 percent.
The United States, the world’s biggest economy, would fare better than the global average, with a projected contraction of 3.8 percent this year.
Germany would perform better than the eurozone as a whole, with its economy set to shrink by 5.4 percent, compared with a contraction of 7.9 percent for the single currency area.
The French economy was set to shrink by 9.5 percent, Italy’s by 10.5 percent and Britain’s by 10.1 percent, the OECD predicted.
Future growth prospects would depend on factors including the severity of new virus outbreaks, the type of restrictions imposed, vaccine deployment and the effects of fiscal and monetary policy actions on demand, the OECD said.


Saudi Arabia to host ‘virtual’ G20 meeting on oil markets

Updated 27 September 2020

Saudi Arabia to host ‘virtual’ G20 meeting on oil markets

  • Energy ministers will also discuss plans for ‘green’ economic recovery from ravages of coronavirus pandemic

DUBAI: Energy ministers from the G20 countries under the presidency of Saudi Arabia will meet virtually on Sunday to discuss volatile oil markets and plans for a “green” recovery from the economic shock of the COVID-19 pandemic.

The Kingdom is strongly backing a “circular carbon economy” strategy to remove harmful greenhouse gas emissions from the atmosphere.

The two-day event is the second time this year that energy policymakers have come together, following the historic meeting last April that helped stabilize crude markets in meltdown.

Markets have since recovered and the price of benchmark Brent crude has more than doubled, but doubts about their resilience have resurfaced amid fears of a “second wave” of economic lockdowns.

Prince Abdul Aziz bin Salman, the Saudi energy minister and chairman of the G20 event, has highlighted the need for tight discipline by members of the OPEC+ oil producers’ alliance to combat market “uncertainty.” 

“If we are serious about mitigating the impact of the shock and navigating through these extraordinary times, this is our only path,” he said.

The G20 said ministers would discuss ways to “strengthen collaboration toward market stability and security and discuss promoting and advancing sustainable energy systems through the Circular Carbon Economy platform,” and address “advancing universal access to energy and clean cooking for all.”

There is consensus on the need to mitigate harmful emissions, but some European countries and nongovernmental organizations are believed to be pressing for a stronger stance on fossil fuels.

The Saudi strategy, supported by the US and Russia, is for a more inclusive stance on hydrocarbon resources, while simultaneously promoting renewable sources such as solar and wind.