Remarks [virtual] by Angel Gurría
OECD, France - 22 September 2020
(As prepared for delivery)
The world is in the grip of the worst health, social and economic crisis of our lifetime. The OECD Interim Economic Assessment, released last week, forecasts global growth to fall by 4.5% this year, before rebounding by 5% in 2021. This is better than we projected in June – largely due to better than expected performance in China, the US and Europe. It is also a reflection of the prompt and effective policy support introduced in G20 economies, which avoided an even larger contraction in output. However, FDI flows will go down by more than 30%, with particularly large drops in equity inflows. We’ve also seen a major fall in trade – to almost 18% in May, but with a recent rebound to minus 10%.
Despite a few encouraging signs, we continue to navigate exceptionally uncertain circumstances. Whether the recent upturn in trade is the start of a positive trend and to what extent the global economy will rebound next year will depend on many elements, not least whether a vaccine is deployed.
But trade policy and the decisions that you make can also make a difference. Even before COVID-19, trade was already in trouble, with rising trade tensions and related policy uncertainty. COVID-19 has brought many additional unavoidable costs to global trade, but there are also avoidable ones stemming from policy choices.
Enhanced global co-operation and co-ordination in fora such as the G20 to keep trade and investment flowing and to avoid escalation of trade tensions, are now more important than ever. Governments need to work together to enable a stable, predictable and rules-based international trading system.
In the midst of this global crisis, we are indeed dependent on transparency, dialogue and trust so countries must refrain from imposing export restrictions on essential goods. OECD work since the onset of the crisis has clearly shown that no country is able to obtain the range of products necessary to combat COVID-19 purely from domestic resources. Trade and resilient global supply chains are part of the solution to ensuring supply of essential goods.
This does not mean business as usual. There is much that can be done to make global supply chains more resilient. While much of it will depend on firms, openness and diversification will remain crucial ingredients. We are also looking at a toolkit of actions that policy-makers can take to support more resilient value chains for essential goods. This could include – for example -- efforts at trade facilitation, including use of digital tools to streamline border processes; working with the private sector on information sharing on bottlenecks, or possible stress tests for supply chains; upstream agreements with firms to reconfigure supply chains; and exploring creation of stockpiles for certain goods.
International cooperation and interconnectedness are crucial for global economic stability. Please count on the OECD to ensure that international trade and investment drive an inclusive and sustainable recovery from which all countries can benefit. Thank you.