Global economic outlook still gloomy
Liu Chunsheng
A trader works on the floor of the New York Stock Exchange in New York, U.S., March 18, 2020. /Xinhua

A trader works on the floor of the New York Stock Exchange in New York, U.S., March 18, 2020. /Xinhua

Editor's note: Liu Chunsheng is an associate professor at the Central University of Finance and Economics in China as well as deputy dean of Blue Source Capital Research Institute. The article reflects the author's opinions, and not necessarily the views of CGTN.

On September 16, the Organization for Economic Cooperation and Development (OECD) published its latest report on global economic outlook this year. Without any doubt, in its prediction, the world economy will continue to be in uncertainty due to the COVID-19 crisis.

The OECD Economic Outlook is the OECD's twice-yearly analysis of the major economic trends and prospects for the next two years.

In its first issue of Economic Outlook 2020 published in June, OECD used a two equally probable scenarios – one in which there will be no other major outbreaks and one in which a second wave of infections, with renewed lockdowns, hits before the end of 2020. In both cases, the world economy won't recover to the level of the fourth quarter of 2019 for at least two years. In the worst scenario, the world economy will drop 7.6 percent in 2020.

The OECD is not the only organization which is pessimistic about the future. The International Monetary Fund (IMF) shared the same opinion of the world suffering from the worst recession since the Great Depression in the 1930s.

However, the OECD adjusted the forecast of 2020 world economy and performances across different regions in its interim economic assessment.

Global GDP is predicted to decline 4.5 percent in 2020, which is 1.5 percent higher than its June forecast. The organization builds its latest forecast on the facts that the reopening of businesses and easing of confinement measures provided support for economic recovery.

Among all G20 countries, China is the only one expected to achieve positive economic output. United States also witnessed a sizable upward revision and along with China, became the main reasons for most of the adjustment to world economic recovery.

Workers assemble forehead thermometers at a factory in Ding'an County of south China's Hainan Province, March 28, 2020. /Xinhua

Workers assemble forehead thermometers at a factory in Ding'an County of south China's Hainan Province, March 28, 2020. /Xinhua

Not every country gained positive adjustment in OECD's latest outlook. India, Mexico and South Africa showed weaker-than-expectation outcomes in the second quarter of 2020, therefore the projections to their GDP outcomes fell 6.5 percent, 2.7 percent, and 4.0 percent, respectively. India's Q2 economic performance was hit hard and reached -23.9 to the shock of the whole world.

The tone of 2020 world economy is still gloomy. A gradual recovery is underway but the uncertainty continues owing to the fear of a second wave of coronavirus outbreak.

The world is on the line of a economic breakdown due to the impact of COVID-19. Every country needs to make its greatest effort to balance between fighting against the virus and avoiding further economic recession.

The world economy is full of changes under such circumstances. therefore it is normal for an organization to adjust its forecast accordingly, which by no means, will affect its authority. After all, too many factors need to be taken into account when projecting economic growth: the possibility of a second wave of COVID-19, measures and policies governments have taken, as well as the relations among different nations during such an unprecedented shock.

The analysis of the OECD Economic Outlook is based on a few assumptions about the transmission of the coronavirus and corresponding policy developments, which is a common practice adopted by many other international organizations and research institutions. That's why the forecast needs to be adjusted regularly.

The OECD calls for fiscal, monetary, and structural support to sustain the most vulnerable. International cooperation is vital to alleviate the negative consequences of the pandemic and accelerate the pace of economic growth.

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