In early March 2020, the OECD’s Interim Economic Outlook highlighted that the coronavirus outbreak had already caused a sharp decline in economic growth in China, and subsequent outbreaks in other countries were eroding prospects for economic growth. Since that time, the increasing spread of the coronavirus across countries has prompted many governments to introduce unprecedented measures to contain the epidemic. While necessary to contain the virus, these measures have led to many businesses being shut down temporarily, widespread restrictions on travel and mobility, financial market turmoil, an erosion of confidence and heighted uncertainty. This approach suggests that the shutdowns could lead to sharp declines in the level of output in many economies, with consumers’ expenditure potentially dropping by around one-third. Changes of this magnitude would far outweigh the economic recession during the global financial crisis.
