Recession Talking Points:
- The OECD reported Monday that its outlook for the global economy was cut sharply owing to the coronavirus
- In a favorable case scenario, the group warned the economy would grow 2.4% for the worst pace since 2009
- G7 finance ministers and central bankers are scheduled to speak Tuesday on a possible response to financial stress
The outlook for the global economy is taking darkening under the fear around the coronavirus’s impact on activity. On Monday, the Organization for Economic Cooperation and Development (OECD) released its interim economic forecasts for March, and the results were troubling. According to the group, the group the global economy could grow only 2.4 percent in 2020 – a significant throttling of the 2.9 percent projected before the virus seized the global headlines. In historical terms, this global pace would be the worst experienced since the 2009 – another remarkably unflattering reference to a period highlighted by the worst financial crisis and one of the worst slumps in modern history.
Something to consider with this unflattering forecast was that it was on the more optimistic end of the curve. According to the group, if the virus’s spread had not peaked in the first quarter of the year as China has attested, the globe could see expansion grind down to a mere 1.5 percent. At such a pace, regions and countries like the Eurozone and Japan that are already flagging could tip into a technical recession[1].
Chart Growth Forecasts from OECD
Chart from OECD Economic Outlook Database
To follow their troubling forecasts, the group would go on to recommend that central banks act to supply a cushion to the financial markets and urged governments to act proactively to curb the spread of the contagion while also shoring up healthcare
