Global economic decline forecast improved
The global economy is doing better than forecasts, but is still on track for an “unprecedented” decline in production, the Organization for Economic Cooperation and Development warned on Wednesday.
In its latest forecast, the OECD said the global economy will contract 4.5% this year. In June, GDP was expected to drop by 6%.
«The fall in global production in 2020 will be less than expected, while still remaining unprecedented in recent history.», – says OECD report.
The organization expects the global economy to grow by 5% in 2021. However, the outlook remains dim due to the ongoing pandemic..
Some of the organization’s assessments also depend on political assumptions that may not be true..
The OECD expects, for example, that the UK will achieve «basic» free trade agreements with the European Union. But negotiations can be ripped off controversial bill introduced by the prime minister’s government Boris Johnson, which will violate the terms of the previous agreement.
The UK economy is expected to contract 10.1% this year, a slight improvement over its previous estimate..
The OECD also expects US lawmakers to approve another stimulus package worth up to $ 1.5 trillion in the fall. It is worth noting that negotiations on this topic are at an impasse.. Reaching an agreement could get more difficult as November elections approach.
Critically affected sectors such as tourism have yet to fully recover from tough restrictive measures introduced earlier this year.. Many countries are fighting an increased number of infections. It is possible that the authorities will reintroduce restrictions in the coming weeks to contain the next waves of coronavirus, which will negatively affect the global economy..
«Production grew rapidly following the easing of restrictive measures and reopening, but the pace of the global recovery has lost momentum over the past few months», – notes the OECD.
China, US and Eurozone are expected to recover faster than originally forecast in June. At the same time, growth expectations for India, Mexico and South Africa have worsened.
China’s economy is likely to grow 1.8% in 2020. It is the only OECD country that is forecast to grow.
US GDP will shrink by 3.8%, and the eurozone – by 7.9%.
An even more bleak picture is expected in India, Argentina, the UK, South Africa and Mexico, which are projected to collapse by more than 10%.
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