Coronavirus will bring down global economic growth to just 1.4%

New Delhi: The global economic growth will be merely 1.4 per cent this year, compared to 2.9 per cent in 2019, due to the impact of the coronavirus pandemic worldwide, Organisation for Economic Co-operation and Development (OECD) has predicted.

In its March report, the 36-member intergovernmental global economic body’s best case scenario projection was that the coronavirus outbreak will impact the world economy with a drop in growth by 0.5 per cent this year followed by a modest recovery in India, China and other emerging markets.

The prediction of reduction in global growth to 2.4 per cent in 2020 from already weak 2.9 per cent in 2019, was made on the assumption that the epidemic peaked in China in the first quarter of 2020 and outbreaks in other countries prove mild and contained.

“Output contractions in China are being felt around the world, reflecting the key and rising role China has in global supply chains, travel and commodity markets. Subsequent outbreaks in other economies are having similar effects, albeit on a smaller scale,” the report said.

Though the OECD projected that the annual global GDP growth may be possibly even be negative in the first quarter of 2020, but it predicted a gradual, albeit modest, recovery in many emerging-market economies. The extent of the recovery is uncertain, the report said adding that an upturn will require a positive impact from reforms and monetary policy support in India and Brazil, well-focused policy measures in Mexico and Turkey to boost sustainable growth, and a gradual recovery in commodity exporters exposed toAthe slowdown in China this year.

But this best case scenario assessment was made before the WHO declared the outbreak of COVID-19 ‘pandemic’ and several countries took stringent measures for the virus containment, including suspension of air travel to the affected parts of the world.

Anticipating such a scenario, the OECD in its report has said that a longer lasting and more intensive coronavirus outbreak, spreading widely throughout the AsiaPacific region, Europe and North America, would weaken prospects considerably.

“In this event, the global growth could drop to 1.5 per cent in 2020, half the rate projected prior to the coronavirus outbreak,” the report said.

The global growth prospects remain highly uncertain due to the coronavirus (COVID-19) outbreak and the resultant economic disruptions, the OECD said. 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, particularly ones strongly interconnected to China, such as Japan, Korea and Australia.