Business closures during the COVID 19 crisis could result in a 15% or more reduction in the level of output in advanced and major emerging-market economies
OECD Secretary General Angel Gurría, in preparation for the G20 Virtual Summit unveiled the latest OECD estimates showing that the lockdown will directly affect sectors amounting to up to one third of GDP in the major economies. For each month of containment, there will be a loss of 2 percentage points in annual GDP growth. The tourism sector alone faces an output decrease as high as 70%. Many economies will fall into recession. This is unavoidable, as we need to continue fighting the pandemic, while at the same time increasing efforts to be able to restore economic normality as fast as possible.
Mr Gurría stressed that the implications for annual GDP growth will ultimately depend on many factors, including the magnitude and duration of national shutdowns, the extent of reduced demand for goods and services in other parts of the economy, and the speed at which significant fiscal and monetary support takes effect.
In all economies, the majority of this impact comes from the hit to output in retail and wholesale trade, and in professional and real estate services. There are notable cross-country differences in some sectors, with closures of transport manufacturing relatively important in some countries, while the decline in tourist and leisure activities is relatively important in others.
Source/ Image Credit: http://www.oecd.org/coronavirus/en/