The global economy appears to be recovering from the coronavirus-induced recession faster than expected, thanks to improved forecasts for China and the US, Reuters reported referring to the Organization for Economic Cooperation and Development (OECD).
According to a new forecast by the OECD, global GDP will contract this year by 4.5% instead of the 6% fall expected in June. The global economy could return to growth and expand by 5% next year if the spread of the virus can be contained, the organization predicted.
The June forecast foresaw a 5.2% rise in 2021. At the same time, an increase in the number of new cases or tightening measures to contain the infection could take away 2-3 percentage points from the expected growth next year, the OECD warns.
OECD forecasts are based on the assumption that localized outbreaks of the disease will continue, but will only trigger a targeted response, rather than quarantining entire countries. The organization also does not expect widespread access to the COVID-19 vaccine until the end of next year. China's GDP is expected to grow 1.8% in 2020, up from a 2.6% contraction forecast in June. The US economy this year may decline by 3.8%, not 7.3%, as previously predicted.
The OECD notes that there are significant discrepancies between the largest economies, where the situation may turn out to be better than expected, and countries such as India, Mexico and South Africa, where the dynamics may be worse than forecasted due to issues with containing the pandemic.