The Organisation for Economic Co-operation and Development (OECD) on Wednesday forecast that global economic damage from the coronavirus would not be quite as bad as it predicted three months ago.
The intergovernmental think tank predicted that world gross domestic product (GDP) would shrink by 4.5% this year – less than the 6% drop it forecast in June.
The global economy should then grow again by 5% in 2021 – leaving it marginally larger than at the end of 2019 before the pandemic hit.
The OECD said its projections assumed that sporadic local outbreaks will continue, but that they would be addressed by targeted local measures rather than the national lockdowns that resulted in record falls in GDP for many countries in the second quarter of 2020.
It was also assuming that no vaccine for the virus will become widely available until late in 2021.
The predicted drop in global output, even though smaller than originally expected, would remain "unprecedented in recent history," the organization said.
The outlook was evolving very differently in different countries, it added, with improved forecasts for Europe, the United States and China, but a worsened outlook for India, Mexico and South Africa.
Eurozone GDP drop
The OECD predicted that eurozone GDP would fall by 7.9% in 2020, then rise 5.1% in 2021. Its June forecast was for the zone to take a 9.5% hit this year, possibly worsening to 11.5% in the case of a major second wave of the virus.
Germany's GDP is now predicted to fall by 5.4% this year, rising again by 4.6% next year.
The forecast for the US is a 3.8% drop in 2020 followed by a 4% rise in 2021.
China's GDP should grow by 1.8% this year and rebound 8% in 2021, the OECD said.
"In most economies, the level of output at the end of 2021 is projected to remain below that at the end of 2019, and considerably weaker than projected prior to the pandemic, highlighting the risk of long-lasting costs from the pandemic," the OECD warned.