Written by: Keith Tully
Published: 1st March 2020
The spread of coronavirus represents the gravest threat to the world’s economy since the financial crisis of 2008, according to the Organisation for Economic Co-operation and Development (OECD).
Governments around the world are urgently assessing how they might contain the virus, which has spread from China to other parts of the world and is already causing very significant economic disruption.
“The virus risks giving a further blow to a global economy that was already weakened by trade and political tensions,” said the OECD’s chief economist Laurence Boone during a presentation in Paris.
“Governments need to act immediately to contain the epidemic, support the health care system, protect people, shore up demand and provide a financial lifeline to households and businesses that are most affected.”
Among the recommendations of the OECD in response to the coronavirus crisis is for flexible working to be made more widely possible by employers so that jobs can be preserved.
Governments are also advised to introduce temporary tax and budgetary measures that might “cushion the impact in sectors most affected by the downturn such as travel and tourism, and the automobile and electronic industries”.
Further to that, the OECD’s experts say that countries most acutely impacted by coronavirus in the coming months should ensure that their banks have enough liquidity to “help companies with cash flow problems while containment measures are in force”.
It remains very unclear just how significant the impact of coronavirus will be on the global economy but the OECD has said that even a best-case scenario will see supply chains disrupted, tourism limited and confidence among businesses drop quite markedly.
The organisation has revised down its forecast for growth across the world economy in 2020 from 2.9 per cent to 2.4 per cent largely as a result of the ongoing health crisis.
In the UK, the Bank of England is working with the Treasury and the Financial Conduct Authority to “ensure all necessary steps are taken to protect financial and monetary stability” as the virus known as Covid-19 continues to spread worldwide.