Coronavirus pandemic causes unprecedented economic decline since WWII

The losses, which the coronavirus pandemic is going to cause to the world economy, are not going to be as large as many thought at the peak of the first wave of the pandemic. However, the improved forecast, which was published on Wednesday, promises an unprecedented decline in global economy in the entire post-war history.

The Organisation for Economic Co-operation and Development (OECD), often referred to as "the Club of the Rich," recalculated estimates from three months ago and now expects global output and consumption to decline by 4.5 percent in 2020 (instead of the predicted six percent) and recover by five percent in 2021.

According to OECD chief economist Laurence Boone, who unveiled the new forecast, one can only be certain that the world will be much poorer if there were no coronavirus.

Before the pandemic, the world was growing richer by about three percent a year. If this trend had continued, the 80-trillion-dollar global economy would have been $7 trillion larger than in the new forecast. In other words, coronavirus-caused losses are tantamount to the complete halt of two largest economies in Europe - Germany and France, the OECD notes.

Obviously, the world will not return to the pre-crisis level of well-being at such a pace, not even by the end of next year, economists write. Mankind has to learn to live with the virus in order to return to normal life even before the vaccine appears. In addition, governments should continue anti-crisis support, even if it costs trillions of dollars and has already led to an increase in the debt of wealthy countries by an average of 15 percent of their GDP.

"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," economist Laurence Boone wrote.

Entire industries still remain in deep crisis. The number of regular flights is half as much as it was a year ago, tourism and entertainment industries are still in hibernation. According to OECD estimates, one in every five employees in developed countries risks losing their jobs.