DEEPEST SLUMP IN A CENTURY: OECD says global economy to contract 6-7% this year

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“By the end of 2021, the loss of income exceeds that of any previous recession over the last 100 years outside wartime.”

PARIS- The global economy will suffer the biggest peace-time downturn in a century before it emerges next year from a coronavirus-inflicted recession, the OECD said on Wednesday.

Updating its outlook, the Organization for Economic Cooperation and Development (OECD) forecast the global economy would contract 6.0 percent this year before bouncing back with 5.2 percent growth in 2021 – providing the outbreak is kept under control.

However, the Paris-based policy forum said an equally possible scenario of a second wave of contagion this year could see the global economy contract 7.6 percent before growing only 2.8 percent next year.

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“By the end of 2021, the loss of income exceeds that of any previous recession over the last 100 years outside wartime, with dire and long-lasting consequences for people, firms and governments,” OECD chief economist Laurence Boone wrote in an introduction to the refreshed outlook.

With crisis responses set to shape economic and social prospects for the coming decade, she urged governments not to shy away from debt-financed spending to support low-paid workers and investment.

“Ultra-accommodative monetary policies and higher public debt are necessary and will be accepted as long as economic activity and inflation are depressed, and unemployment is high,” Boone said.

As the threat of a second wave of contagion keeps uncertainty high, Boone said now was no time to fan the flames of trade tensions and governments should cooperate on a treatment and vaccine for the virus.

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