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March 3, 2020

Coronavirus – the “Gravest Threat” to the Global Economy Since the Financial Crisis

London – 03 March 2020 – The coronavirus presents the global economy with its greatest danger since the financial crisis. That’s according to the latest Interim Economic Outlook from the OECD.

It forecasts a sharp slowdown in world growth in the first half of 2020 as supply chains are hit, tourism is hit and confidence weakens. The OECD is now predicting growth of 2.4% for the whole year, compared to 2.9% in 2019.

Growth in China has been revised down to below 5% this year, compared to 6.1% last year.

Even in the best-case scenario of limited outbreaks in countries outside China, a sharp slowdown in world growth is expected in the first half of 2020 as supply chains and commodities are hit, tourism drops and confidence falters. Global economic growth is seen falling to 2.4% for the whole year, compared to an already weak 2.9 % in 2019.  It is then expected to rise to a modest 3.3% in 2021.

Growth prospects for China have been revised down sharply to below 5% this year after 6.1% in 2019. 

OECD Chief Economist Laurence Boone says: “The virus risks giving a further blow to a global economy that was already weakened by trade and political tensions. Governments need to act immediately to contain the epidemic, support the health care system, protect people, shore up demand and provide a financial lifeline to households and businesses that are most affected.”

The Outlook also says that flexible working should be utilised to preserve jobs. Governments should implement temporary tax and budgetary measures to cushion the impact in sectors most affected by the downturn such as travel and tourism, and the automobile and electronic industries.

In Brussels, European Centre for Disease Prevention and Control, has issued a statement says that risk associated with COVID-19 infection for people in the EU/EEA and UK is currently considered moderate to high. It states: ‘The evidence from analyses of cases to date is that COVID-19 infection causes mild disease (i.e. non-pneumonia or mild pneumonia) in about 80% of cases and most cases recover, 14 % have more severe disease and 6% experience critical illness. The great majority of the most severe illnesses, and deaths, have occurred among the elderly and those with other chronic underlying conditions. In addition to the public health impacts with substantial fatal outcomes in high-risk groups, COVID-19 outbreaks can cause huge economic and societal disruptions’.

Meanwhile the UK government  has held an emergency meeting of its ministers to discuss the crisis. The UK Prime Minister, Boris Johnson has admitted that the spread of the virus is highly likely to worsen over the coming days. He says: “We have also agreed a plan so that if and when it starts to spread, as I’m afraid it looks likely it will, we are in a position to take the steps necessary to contain the spread of the disease as far as we can, and to protect the most vulnerable.”

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