The Organisation for Economic Co-operation and Development (OECD) has released an updated economic outlook. The new forecast estimates that global GDP will shrink by 4.5 per cent this year followed by growth of 5.0 per cent next year. The global economy grew by 2.6 per cent in 2019.

Although still a major contraction, the forecast for 2020 is an improvement over the -6.0 per cent estimate released in June. The OECD attributes the improvement ”to better than expected outcomes for China and the United States in the first half of this year and a response by governments on a massive scale.”

It’s important to stress that the “outlook is subject to considerable uncertainty and projections are dependent on assumptions about the spread of the COVID-19 virus and policy developments. The projections assume that sporadic local outbreaks will continue, with these being addressed by targeted local interventions rather than national lockdowns.”

The degree of bounce back next year is particularly uncertain. “If the threat from COVID-19 fades more quickly than expected, improved business and consumer confidence could boost global activity sharply in 2021. But a stronger resurgence of the virus, or more stringent lockdowns could cut 2-3 percentage points from global growth in 2021.”

Canada’s GDP is forecast to fall by 5.8 per cent this year and rebound by 4.0 per cent in 2021.