The economic damage done to developed nations by the COVID-19 crisis has far eclipsed the damage done by the financial crisis, the Organisation for Economic Co-operation and Development (OECD) said on Wednesday.
The OECD, which represents 37 developed nations around the world, said the combined GDP of its members fell by 9.8% in the second quarter of 2020.
The second quarter collapse in GDP was “unprecedented,” the OECD said, and “significantly larger” than the 2.3% decline seen in the first quarter of 2009, which marked the worst three month period of the financial crisis.
The OECD and its partners represent 80% of global trade and investment, according to the organisation, underlining the importance of its figures.
The organisation said the huge second quarter GDP slump was driven by “COVID-19 containment measures across the world since March 2020.” Strict lockdowns led to shuttered factories and offices, declining global trade, and job losses around the world.
The worst slump was seen in the UK, where GDP shrank by 20.4% in the second quarter. In the US, GDP shrank by 9.5% and the eurozone economy contracted by 12.1%.
In its half-year report on the world economy in June, the OECD said global economic activity was expected to register an annual contraction of 6% in 2020. Global unemployment was forecast to reach 9.2%. The group said global GDP was unlikely to recover to pre-pandemic levels for at least two years.
“As restrictions begin to be eased, the path to economic recovery remains highly uncertain and vulnerable to a second wave of infections,” the OECD said in June.
“With or without a second outbreak, the consequences will be severe and long-lasting.”
This week Germany decided to extend its state employment support scheme into 2021, while the UK is facing pressure to do the same. On Tuesday, UBS downgraded its forecasts for the UK economy this year, predicting a 10.1% contraction.