OECD warns of severe economic hit from virus outbreak

Organisation says China's output contractions due to Covid-19 'are being felt' worldwide. FMTNews OECD

PARIS: 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%, the lowest rate since the 2008-09 financial crisis.

Stock markets plummeted worldwide last week as investors fled to bonds and other safe havens on fears that consumer and business spending will freeze up as the virus spreads, curtailing corporate profits. 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.

Growth in the euro area was projected to remain “sub-par” at about 1% per year on average in 2020 and 2021, the OECD said. “A longer lasting and more intensive coronavirus outbreak, spreading widely throughout the Asia-Pacific region, Europe and North America, would weaken prospects considerably,” the OECD warned.

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