The OECD slashed India’s growth forecast for 2020-21 by 110 basis points to 5.1% over adverse impacts of the coronavirus outbreak on confidence, financial markets and supply chains.
The Organisation for Economic Cooperation and Development said that the Covid-19 outbreak is plunging the world economy into its worst downturn since the global financial crisis, and urged governments and central banks to fight back to avoid an even steeper slump.
The global economy is set to grow only 2.4% this year, the lowest since 2009 and down from a forecast of 2.9% in November, the OECD said in an update of its outlook.
The Paris-based policy forum projected the global economy could recover to 3.3% growth in 2021, assuming the epidemic peaked in China in the first quarter of this year and other outbreaks proved mild and contained. However, if the virus spreads throughout Asia, Europe and North America, global growth could drop as low as 1.5% this year, the OECD warned.
“The main message from this downside scenario is that it would put many countries into a recession, which is why we are urging measures to be taken in the affected areas as quickly as possible,” OECD chief economist Laurence Boone said.
She said the governments needed to support health systems with extra pay or tax relief for workers doing overtime and short-time working schemes for companies struggling with a slump in demand.
Governments could give companies further financial relief by cutting social charges, suspending value-added taxes and providing emergency loans for sectors particularly hard, such as travel, Boone said.