G20 Finance Ministers and Central Bank Governors’ Virtual Meeting

 

Remarks by Angel Gurría

OECD Secretary-General

31 March 2020

(as prepared for delivery)

 

 

Ministers, Governors,

The socio-economic repercussions of the health crisis will survive the pandemic and will exceed those of 2008 and 2009. Border and business closures are bringing service and industrial sub-sectors to a halt or creating supply chain difficulties. In most economies, the sectors most directly affected account for 30 to 40 percent of total output. The tourism sector alone faces an output decrease as high as 70%.

While the situation is rapidly evolving, the OECD currently estimates a decline in annual GDP growth of about 2 percentage points for each month that strict containment measures continue. If the shutdown goes on for three months, with no offsetting factors, annual GDP growth could be 6 percentage points lower than the baseline - which was about 3% GDP growth in 2020.

Building on governments’ already announced bold response measures, G20 coordination would be necessary to:

• First, induce joint government action to massively ramp up the production of medical equipment and supplies to ensure that affordable vaccines and treatments are made widely and swiftly available.
  
  
• Secondly, to enhance the impact of monetary policy by concerted actions to relieve stress financial markets, and to launch broad-scale fiscal actions. The focus should be on getting cash to households and businesses on a timely basis, particularly by reducing bureaucratic obstacles to cash transfers. In the case of businesses, there must also be incentives to repay as they recover, for example, through restrictions on dividends.
  
  
• Third, deescalate trade tensions, urgently lift restrictions on the trade of essential goods, including medical equipment, and refrain from raising new barriers to investment or trade;
  
  
• Fourth, if G20 health sectors and economies are being severely tested, such systems in developing countries will be brought to the brink. As the house of the DAC, we encourage providers of development and humanitarian assistance to target primarily the health and humanitarian challenges when deciding on their ODA allocations. On developing countries’ debt, we fully support the IMF and WBG call and support a new HIPC initiative, an “HIPC on steroids”!

 

The OECD supports the development of the G20 Action Plan and is active working on it. Besides defining immediate policy responses, of which the OECD is taking stock through its country policy tracker on COVID, we should also lay the foundations of the post-crisis economy. We should start by addressing the consequences of the policies undertaken to stop the virus, and simultaneously those that are necessary going forward to support to global demand – including through smart, green, innovation-led investment to ensure a strong, sustainable and inclusive economic recovery.

Count on the OECD’s multidisciplinary expertise to support G20 countries and the Saudi Presidency in ensuring the effectiveness of your collective actions.

 

 

See also:

OECD work with G20