In Focus Collections


Time to build world confidence again


A new international report highlights that building confidence is crucial amid an uncertain economic recovery


Laurence Boone Chief economist, OECD


With the COVID-19 pandemic continuing to threaten jobs, businesses and the health and well-being of millions amid exceptional uncertainty, building confidence will be crucial to ensure that economies recover and adapt.


Unprecedented collapse After an unprecedented collapse in the first half of the year, economic output recovered swiftly following the easing of containment measures and the initial re-opening of businesses, but the pace of recovery has lost some momentum more recently. New restrictions being imposed in some


countries to tackle the resurgence of the virus are likely to have slowed growth.


Uncertainty Uncertainty remains high and the strength of the recovery varies markedly between countries and between business sectors. Prospects for an inclusive, resilient and


sustainable economic growth will depend on a range of given factors, including the


likelihood of new outbreaks of the virus, how well individuals observe health measures and restrictions, consumer and business confidence, and the extent to which government support to maintain jobs and help businesses succeeds in boosting demand. Our Interim Economic Outlook projects


global GDP to fall by 4.5% this year, before growing by 5% in 2021. The forecasts are less negative than those


in OECD’s June Economic Outlook, due primarily to better than expected outcomes for China and the United States in the first half of this year and a response by governments on a massive scale. However, output in many countries at


the end of 2021 will still be below the levels at the end of 2019, and well below what was projected prior to the pandemic. If the threat from COVID-19 fades more


quickly than expected, improved business and consumer confidence could boost global activity sharply in 2021. But a stronger resurgence of the virus,


The world is facing an acute health crisis and the most dramatic economic slowdown since the Second World War. The end is not yet in sight, but there is still much policymakers can do to help build confidence


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or more stringent lockdowns could cut two to three percentage points from global growth in 2021, with even higher unemployment and a prolonged period of weak investment.


Acute crisis The world is facing an acute health crisis and the most dramatic economic slowdown since the Second World War. The end is not yet in sight, but there is


still much policymakers can do to help build confidence.


www.CCRMagazine.com It is important that governments avoid


the mistake of tightening fiscal policy too quickly, as happened after the last financial crisis. Without continued government support,


bankruptcies and unemployment could rise faster than warranted and take a toll on people’s livelihoods for years to come. Policymakers have the opportunity of a


lifetime to implement truly sustainable recovery plans that reboot the economy and generate investment in the digital upgrades much needed by small and medium-sized companies, as well as in green infrastructure, transport and housing to build back a better and greener economy.


Warning The report warns that many businesses in the service sectors most affected by shutdowns, such as transport, entertainment and leisure, could become insolvent if demand does not recover, triggering large- scale job losses. Rising unemployment is also likely to


worsen the risk of poverty and deprivation for millions of informal workers, particularly in emerging-market economies. The rapid reaction of policymakers in


many countries to buffer the initial blow to incomes and jobs prevented an even larger drop in output. The Interim Outlook says it is essential for


governments not to repeat mistakes of past recessions but to continue to provide fiscal, financial and other policy support at the current stage of the recovery and for 2021.


October 2020


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