Remarks by Angel Gurría
Session 1: The Response to the COVID-19 pandemic
OECD, Paris France - Wednesday, 14 October 2020
Dear Ministers, Governors,
Although we continue to navigate uncertainty, we are starting to have a clearer picture of the magnitude of the crisis. The OECD´s September Interim Outlook has shown that almost all G20 countries are suffering an extremely deep recession in 2020. We project the world economy to shrink by 4.5% this year. The hardest hit G20 economies, both advanced (France, Italy, United Kingdom) and emerging (Argentina, Mexico, South Africa) are expected to have declines of around 10% of GDP. In our central projection, the level of global GDP could be 7 trillion US dollars lower by the end of 2021 than we projected prior to Covid-19.
We expect a slow and halting recovery until a vaccine or treatment is widely distributed. The resurgence of Covid-19, notably in Europe, is troublesome and high frequency data suggest the pace of the global recovery moderated in the third quarter after an initial rebound.
Despite a vast range of G20 emergency measures, millions of workers have lost their jobs and have seen their incomes decline. Pre-existing challenges of structural inequalities - including those based on age, gender and employment contract status - have been compounded by the pandemic.
Covid-19 is also acting as a massive reallocation shock that will change the structure of our economies. As noted in the requested recovery report that we will deliver to you in November as part of the Action Plan´s commitments, fiscal and monetary policy support will continue to be crucial, ensuring policies are adapted and targeted to where they are most effective. At the same time, it will be necessary to promote structural and transformative policies through action on 3 main fronts:
First, fostering the reallocation of resources and boosting productivity and growth by adapting job retention schemes to encourage job search, removing barriers to worker mobility and firm entry, increasing competition and facilitating firm restructuring.
Second, supporting people to find new jobs via re-skilling and job placement policies, with a strong emphasis on building digital skills – especially for the low skilled and other vulnerable groups – and strengthening income protection mechanisms.
Third, reinforcing sustainability and resilience by increasing public and private investments, especially in resilient infrastructure, health systems, digitalisation, education and training, and lowering emissions; while reviewing public spending and shifting towards broader, more diverse revenue sources. With regards to infrastructure, let me highlight the report we just delivered to you on the resilience of infrastructure systems against multiple dimensions and risks.
These efforts will need to be complemented by stronger international co-operation in five key areas: i) manufacturing and distributing health equipment and vaccines; ii) reducing trade policy barriers to promote efficient and robust GVCs; iii) the taxation of multinationals in an increasingly digitalised economy; iv) building an environmentally more sustainable economy; and v) preventing sudden capital outflows and sovereign debt crises. The G20 must continue to lead global efforts on all these fronts. Please count on the OECD!