World economy may shrink due to coronavirus, says global watchdog; lowers growth forecast for 2020

In China, where the virus dubbed COVID-19 emerged in December, annual GDP growth is expected to reach just 4.9 percent, a 0.8 point drop from the OECD’s original growth forecasts announced last November.

The coronavirus outbreak will have a major impact on economic growth worldwide this year, the OECD warned Monday as it lowered its global GDP forecast by half a percentage point to 2.4 percent, the lowest rate since the 2008-09 financial crisis.

Passengers wearing protective masks pass through fare gates at a subway station in Shanghai, China, on Monday, March 2, 2020. (Bloomberg)

That forecast assumes the virus outbreak fades this year, but a more severe outbreak “would weaken prospects considerably”, the group of free-market economies said.

Already the global economy risks an outright contraction in the first quarter, the OECD said, in its first comprehensive study of the impact on the world’s major economies.

In China, where the virus dubbed COVID-19 emerged in December, annual GDP growth is expected to reach just 4.9 percent, a 0.8 point drop from the OECD’s original growth forecasts announced last November.

“Output contractions in China are being felt around the world,” the 36-member Organization for Economic Cooperation and Development said, as the outbreak continues to batter production, trade, tourism and business travel.

Efforts to contain the virus in China have entailed quarantines and work and travel restrictions that caused delays in restarting factories after the Lunar New Year holiday, as well as sharp cutbacks in service sector activities.

Nearly 90,000 people have been infected in over 60 countries, and more than 3,000 people have been killed as governments scramble to keep the outbreak from spiralling into a pandemic.