OECD sees deepest peace-time slump in a century

The global economy will suffer the biggest peace-time downturn in a century before it emerges from recession next year.

That was the warning from the OECD on Wednesday (June 10).

It forecast the world economy would contract 6% this year, before bouncing back with 5.2% growth in 2021 if the outbreak is kept under control.

But the OECD said a second wave of contagion could see the global economy contract just over seven and a half percent, and growth next year would then be a mere 2.8%

OECD Secretary General Angel Gurria.

"Now, hundreds of millions have become unemployed, and that is in the scenario that no second wave of infections happens. In the event that it would, you know this kind of double hit, the fall in global GDP would be over seven and a half percent and we'd be looking at perhaps 40 million more unemployed."

The OECD urged governments not to shy away from debt-financed spending to support low-paid workers and investment, as their crisis responses are set to shape economic and social prospects for the coming decade.

The policy forum also warned governments not to inflame trade tensions, and called on authorities to work together on a vaccine for the virus.

The U.S. economy - the world's largest - is seen contracting 7.3% this year.

But the OECD said a second outbreak could see the U.S. recession reach 8.5%.

Britain is expected to see the worst downturn among the countries covered by the OECD, with its economy forecast to contract 11.5% this year.