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According to the organization, a further contraction of gross domestic product (GDP) is expected in the event of a second wave of the epidemic.
The OECD says that the coronavirus epidemic will negatively affect both internal and external demand. Depending on the scenario (one or two waves of virus spread), 3.4-6.4 percent is expected next year. GDP growth.
The OECD notes that Lithuania’s stimulus package was timely, comprehensive, and should help mitigate the economic impact of the COVID-19 pandemic.
“Measures such as short-term employment plans and support for atypical workers can help preserve jobs and income. It is important to ensure that support measures are adequately targeted at companies and workers most affected by the crisis. The low level of public debt provides fiscal freedom to provide additional support in the event of a slower than expected, “said the organization.
According to the OECD, it is important to avoid increasing poverty, which is already high, even by increasing social benefits for people with the lowest incomes. Furthermore, structural policies will play an important role in the post-crisis recovery. Ensuring effective assistance to job seekers, as well as training and retraining programs, is crucial.
Effective insolvency procedures, which would facilitate corporate restructuring, are also essential for economic recovery.
Another priority is to ensure that the health system is prepared to resist a possible second outbreak with sufficient resources. Climate-related investment projects are needed to ensure that the recovery is less damaging to the environment.
OECD chief: this is the worst crisis
The OECD predicts that global GDP will fall between 6 and 7.6% in 2020, and that of the euro area between 9.1 and 11.5%. Next year, the global and euro area economies are expected to grow between 2.8 and 5.2 percent, respectively. and 3.5-6.5 percent.
OECD Secretary General Angel Gurria says the organization predicts a global economic recession for the first time in its history.
“We are probably in the most global health, economic and social crisis: it is simply the most difficult we have seen (…) From an economic perspective, 6 percent. The decrease in world GDP that we forecast this year is greater than expected in 60 years since the OECD was founded. Hundreds of millions of people have lost their jobs, “Gurria said at a press conference on Wednesday.
“And this is a scenario without a second wave of infection. And if it increased and we experienced a kind of double whammy, the planet’s economy would shrink by more than 7.5 percent. Then we would see perhaps another 40 million. more people who have lost their jobs, “he added.
OECD chief economist Laurence Boone noted that states must invest responsibly and not repeat the mistakes of previous crises, because it is now that the world of the future is being created.
“Governments have tended to support the auto industry, for example, regardless of whether the money goes to green cars or polluting vehicles of yesterday. Today, we are already seeing a change: if you look at support for this sector in Germany or France is seeing a focus on better, cleaner cars. I think it shows what can be done to create a better tomorrow, “Boone said.
In the Lithuanian economic development scenario prepared in April, the Ministry of Finance predicts that the country’s economy will decline 7.3 percent this year, and will grow 6.6 percent in 2021. Inflation will drop to 1% this year and rise to 2% next year. The unemployment rate will increase to 10.5 percent this year, and in 2021 it will decrease to 8.1 percent. The ministry will publish an updated economic development scenario this June.
Lithuania often became a member of the OECD in 2018, often called the “Club of Rich Economies”.
World GDP will drop at least 6% in 2020.
World gross domestic product (GDP) will drop at least 6% this year due to strict quarantine measures taken to curb the coronavirus outbreak, the Organization for Economic Cooperation and Development (OECD) said on Wednesday, warning that the Recovery will be “slow and fragile”.
And in the case of a second wave of contagion later this year, the global economic recession could hit 7.6 percent in 2020, the organization estimates.
GDP is expected to grow 5.2% in 2021, but in the case of a second wave of pandemics, growth will be less than 2.8%, according to the latest OECD survey titled “Global Economy on a Tightrope “
According to OECD estimates, euro area GDP will fall 9.1% this year and increase 6.5% next year. However, in the case of a second wave of the pandemic, the decline will be 11.5 percent this year, and in 2021, GDP will grow just 3.5 percent.
US GDP USA It will drop 7.3 percent this year in the first scenario, and increase 4.1 percent next year. Under the second scenario, the US economy. USA It will shrink by 8.5 percent this year and grow by 1.9 percent next year.
“By the end of 2021, the amount of lost revenue will be greater than in any previous recession in the past 100 years, excluding wartime, and the consequences for individuals, businesses and governments will be painful and long-lasting,” said the report.
“Private debt levels are dangerously high in some countries, and there is a high risk of corporate collapse and bankruptcy.”
In an earlier report released in March, when a coronavirus outbreak had already affected China but had not yet reached other major world economies, the OECD cut its forecast for world economic growth this year by half a percentage point to 2.4 percent. and noted that such global GDP growth would be the lowest since the 2008 financial crisis.
Until there is a vaccine or treatment for coronavirus, which has already killed more than 400,000 people worldwide. lives, politicians will continue to “tie”, according to the report.
The main measures to combat a pandemic will be to keep a physical distance to prevent infection, assess the virus in people, and track and isolate those infected.
“However, sectors affected by the border closure, which require close personal ties, such as tourism, travel, entertainment, restaurants and accommodation, will resume the change,” said the OECD report.
The organization also cautions that these key measures may not be enough to prevent a second outbreak.
“Governments will need to tailor support and assist them during the transition, which will allow for rapid implementation of corporate restructuring processes.”
“And to reduce doubts and boost economic growth, it will be crucial to ensure international cooperation in the fight against the virus … and to broaden multilateral dialogue more broadly,” the organization said.
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