BY Tom Burnett CFA
On March 27, 2020, the Organization of Economic Co-operation a Development in Paris issued a formal announcement on the impact of the coronavirus outbreak on the global economy. The announcement gave an update to the group’s forecast for global growth issued last November. World GDP growth is now seen to expand by 2.4% in 2020, down from a 2.9% rate in the November forecast. The World GDP growth rate for 2019 was 2.9%. The OECD also noted that its projection is subject to risks that the pandemic continues to expand throughout the entire 2020 year. In that dire case, World GDP would grow by a smaller 1.5%.
Looking at specific regions, the revised forecasts reflect similar patterns arising from the virus outbreak. The role of China is key since the Chinese economy now accounts for 16% of the World GDP, up from just 6% in 2002. In the latest forecast, the OECD now expects the China GDP to grow by 4.9%, down from a rate of 5.7% projected in its November 2019 Report. In 2019, China’s GDP grew by 6.1%.
In the U.S., GDP is now forecast to grow at a rate of 1.9%, down from a rate of 2.0% in the November Report and a rate of 2.3% for the 2019 year. As for the EU, the 2020 GDP growth rate is now projected to be 0.8%, down from 1.1% in the November Report and 1.2% for the 2019 year. Importantly, the OECD noted that all the revisions are likely to be revised downward again if the virus expansion is not contained by the end of the June quarter.
Tom Burnett CFA is Director of Research