Remarks by Angel Gurría
(As prepared for delivery)
Dear Chairman of the International Advisory Board, Dear Dean, ladies and gentlemen,
I am delighted to be part of the Business Leadership Forum 2020 organised by IE Business School.
Today, I would like to share some thoughts on the tough times that virtually all countries are faced with as a result of COVID-19, and offer some ideas on the priorities that the OECD feels should spearhead the reconstruction of our economies and societies.
The world is currently going through the worst health, economic and social crisis since the Second World War.
To date, over 31 million cases of COVID-19 infection have been reported worldwide, and every day brings us closer to the grim milestone of one million deaths. The virus continues to spread in many countries, while in many others it is resurging with force. And we will continue to live with it until we are able to discover and, more to the point, produce and distribute an effective vaccine or treatment on a large scale.
In addition, containment measures and the general decline in economic activity have meant that this year we are facing the worst recession in the OECD's 60-year history. In fact, our latest Economic Outlook, published last week, estimates that global GDP could fall by 4.5% this year, before growing back by close to 5% in 2021.
Unfortunately, recovery is, and will be, slow and very uneven across sectors and countries. Economic activity has been regaining momentum in some countries but there is evidence to suggest that this recovery is running out of steam and that confidence remains weak. The reality is that GDP in many OECD countries will not return to its level at the end of 2019 until the end of 2021.
The COVID-19 crisis is having a significant impact on people's well-being. In just a few months, it has wiped out all the jobs created since the 2008 financial crisis. And young people, in particular, may be the biggest losers. Between February and June, youth unemployment in OECD countries increased from 11.3% to 16.7%. Since then, we have seen a slight improvement, but it remains a serious concern.
The figures would have been much worse if governments had not taken unprecedented measures to contain the disease, safeguard economic activity and protect the most vulnerable. Countries have mobilised trillions of euros to support businesses and families, to make up for lost income and to expand social protection programmes. Job retention schemes (ERTEs in Spain, for example) have supported about 50 million jobs across OECD economies, about ten times as many as during the 2008 financial crisis.
At the OECD, we are working hard to support our members and the international community in their response to the crisis. Our digital "hub" on tackling COVID-19 contains more than 140 documents with analyses, data, good practices and policy recommendations on the different aspects of the crisis. In addition, our main annual event, the OECD Ministerial Council Meeting, will take place at the end of October, chaired by Spain, and will focus on finding solutions for a "strong, sustainable, green and inclusive" recovery.
The truth is that the road to recovery will be long and hard. Above all, we have to learn to live with the virus, restore confidence and work towards a recovery that leaves no one behind. I would like to outline a number of priorities that could help boost and speed-up recovery.
First, and I never get tired of repeating it, presenting the problem as a choice between health and the economy is to pose a false dilemma. We must continue to insist on hygiene measures and social distancing while increasing our capacity to test and trace, and selectively consider additional public health measures. And, of course, we must continue to invest in our health systems.
Second, we must learn from the mistakes of 2008, and maintain fiscal and monetary efforts throughout this year and the next. If we withdraw stimulus packages too soon then we will be paving the way for a wave of business insolvencies and mass unemployment.
The main objective must be to use stimulus plans to revive the economy. But maintaining support programmes is not incompatible with adapting them to include those who need them the most, i.e. the unemployed, young people and low-skilled workers. Moreover, a precise decision will be needed on exactly which support measures to maintain and for how long, in order to avoid generating lasting market distortions that would damage competition and the international level playing field.
Third, we now have an opportunity to build back better. Stimulus and reconstruction plans are a chance to address persistent problems, from low productivity to inequalities and environmental emergencies. The aim is not to return to a pre-crisis state of affairs but to look ahead to a more digital, more inclusive and more sustainable future.
As we highlighted in a report published last week during our Ministerial Council Roundtable on the environment, renewable energies, sustainable transport and the circular economy offer considerable opportunities for investment and the creation of quality jobs. And it appears that many OECD countries are moving in this direction. In OECD countries alone, according to a preliminary estimate, governments have committed at least USD 312 billion to supporting a “green” recovery.
Finally, an ambitious, coordinated and consistent multilateral response is also essential. International cooperation will be crucial for discovering, producing and distributing a vaccine on a massive scale. But it is equally important to strengthen international cooperation in order to preserve the rules-based multilateral trade and investment system, and to strengthen the resilience of global value chains.
The same can be said of another highly topical issue that can only be resolved at the international level, the taxation of the digital economy. As you know, at the OECD we have been working hard for three years to achieve a consensual solution as fast as possible. Without a multilateral solution, the accumulation of unilateral measures could lead to new and serious trade tensions that the world can ill afford at the moment.
Ladies and gentlemen,
We are living in times of great uncertainty, times that require bold action at the national level, and more and better cooperation at the international level. It is precisely these challenging times that are giving us an opportunity to rebuild our economies and societies, to rethink our models and to move towards a more inclusive and sustainable future.
This is at the heart of all our efforts at the OECD. And rest assured that you can count on our support to accompany you in this transformation. Thank you.