The coronavirus pandemic has wreaked havoc across the globe, and as well as responding to the continuing global medical emergency countries are now facing the economic impact of the COVID-19 virus. The US economy has officially entered recession for the first time since the global financial crisis in 2009, while the UK is expected to go through its deepest recession in more than 300 years. Many other countries across the world are also facing tough times. Using OECD projections for GDP growth in 2020 as a guide, click or scroll through to see what might be on the horizon for countries' economies following the pandemic.
South Korea saw its economy contract by 1.3% at the start of 2020. But the country's deft handling of the pandemic has not only saved lives but prevented more extreme economic fallout. The measures taken by authorities in the country to mitigate the effects of the disease have also helped lessen its impact on the economy. So much so that, out of all the countries analyzed by the OECD, South Korea is predicted to be the least affected economically with a full-year GDP contraction of just 1.2% or 2.5% in a second-hit scenario. This compares to a global average of -6% in a single-hit scenario or -7% for a second-hitter.
Given China was the first country affected by the virus and the first to impose a blanket lockdown, it stands to reason its GDP figure for the first quarter of 2020 is one of the worst in the world at -9.8%. The good news is the country appears to be recovering quickly from the pandemic. Accordingly, the OECD expects GDP for 2020 as a whole to decline by a not so bleak 2.6% or 3.7% if a second wave transpires.
The shuttering of businesses in Indonesia has done the country's economy zero favors with GDP down 2.4% during Q1. On a more positive note, the OECD is encouragingly upbeat about the future economic prospects of Indonesia, which isn't the case for the majority of nations included in its analysis. The country's 2020 GDP is projected to hit a not too drastic -2.8% or -3.9% in a second-wave scenario.
Amid dramatically reduced demand from China for the country's exports, Australia's economy didn't do too badly at all during the first quarter of 2020, contracting by just 0.3%. But its fortunes are set to worsen for the remainder of the year, and the latest OECD predictions project GDP of between -5% and -6.3% for 2020. While a further drop in GDP isn't great news, it is worth noting that Australia's projections are far from the worst figures predicted for the coming year.
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Denmark was one of the first European countries to impose a lockdown, which came into force on 11 March. The knock-on effect on GDP was swift and brutal with a contraction of 2.1% in the first quarter, but as the nation is also one of the first to lift stay-at-home restrictions, the outlook is relatively bright. The Danish economy is predicted to shrink 5.8% this year, with this increasing to a fall of 7.1% if a second wave hits. But this is significantly less than what is likely for other European countries.
The Indian economy hadn't felt the full effects of the pandemic during the first quarter of this year since the country's national lockdown didn't kick in until 26 March. Subsequently a staggering 25% of jobs have been lost countrywide. Before the pandemic took hold India saw positive GDP, expanding 3.1% year-on-year in the first quarter of 2020. However, this is likely to fall fast. The Organization for Economic Cooperation and Development (OECD) predicts India's GDP for the full year will dip for the first time since 1979, falling to -3.7% or -7.3% if a second wave hits.
Japan saw GDP drop 0.6% in the first three months of 2020. But the government is throwing everything it has at combating the financial effects of the virus, having launched a bumper $2.2 trillion (£1.7tn) stimulus package, which is equal to both America's COVID-19 relief effort and the entire economy of Italy. This will clearly go a long way towards cushioning the country financially. Still, the OECD predicts that the pandemic will see the economy contract by 6%, or 7.3% in the event of a second wave.
Sweden saw its GDP increase by 0.1% in the first three months of the year. The Scandinavian country didn't impose the strict lockdowns seen in countless countries around the world. But while this controversial approach has no doubt softened the economic blow of the virus, Sweden will nonetheless take a financial beating with the OECD forecasting a fall in GDP of either -6.7% in a single-hit scenario or -7.8% should a second wave occur.
Turkey has managed to stave off the massive job losses countries including India and the US are grappling with, but lockdowns and other measures to curb movement have hurt the nation's economy. GDP may have been in positive territory during the first quarter of 2020, but the OECD predicts a figure of -4.8% for the whole year or -8.1% if the country suffers a second wave of the disease.
Battered and bruised by the shutdown of businesses, international trade and more, America's economy shrank by 5% during Q1, its biggest contraction since the global financial crisis. As job losses hit record levels, the US government is rolling out a $2.2 trillion (£1.7tn) stimulus package, which should speed up the recovery. That said, GDP is predicted to drop 7.3% this year according to the OECD, or 8.5% if a second wave hits.
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During the first quarter of 2020 Mexico's economy experienced its biggest contraction since 2009 following the global financial crisis, with GDP falling by 1.4%. As COVID-19 disrupts everything from trade to consumer spending, a deep recession – possibly the worst for a century – is on the cards for the country with predicted GDP for 2020 of -7.5% if a second wave is averted and -8.6% if it isn't.
The Irish economy was the fastest growing in the Eurozone pre-coronavirus and GDP during Q1 was impressive given the circumstances at 1.2%. Weeks of lockdown, disruptions to trade and myriad other COVID-19-related factors have put paid to Ireland's economic growth spurt. In fact, the OECD forecasts abysmal GDP of -6.8% for 2020, or an even more grim -8.7% in a double-hit scenario.
The two key things that fuel Germany's economy, consumer spending and exports, have been massively impacted by COVID-19, hence GDP falling by 2.2% for the first quarter of 2020. Be that as it may, the OECD has issued a more optimistic full-year forecast for Germany, compared to countries such as the UK and France, with GDP likely to contract between 6.6% and 8.8%.
Brazil was hit by the virus later than other countries but is now the second most affected in terms of infections. The worsening situation in the latter part of Q1 is reflected in the GDP figure of -1.5%. As the pandemic rages in the country, the economic impact is set to get even worse. If a second wave can be avoided, the OECD predicts that GDP will average -7.4% for 2020. And if it can't, the figure will bottom out at a depressing -9.1%.
Canada's GDP slumped 2.1% during the first three months of 2020 as businesses quickly shut their doors and household consumption decreased sharply, though the country fared better economically than its richer neighbor to the south. The Canadian economy is, however, unlikely to outperform its US counterpart during the rest of the year according to the OECD, which implies the recovery may be slow, with GDP set to be down 8%, or 9.4% in the worst-case scenario.
As is the case elsewhere, economic activity has slowed to a snail's pace in Poland and unemployment is on the rise. However, following the modest drop in GDP by 0.4% for the first three months of the year, Prime Minister Mateusz Morawiecki hopes the nation can escape with a contraction of less than 4% in 2020 as a whole. But the OECD is not as quite as bullish, and it expects the Polish economy to shrink by 7.4% or as much as 9.5% if a second wave strikes.
The Dutch economy contracted by 1.7% in the first quarter of the year, the steepest three-month slump since the aftermath of the global financial crisis in 2009. Mirroring other European countries that have been under extended lockdowns, it has been predicted that the Netherlands will end the year markedly worse off, with GDP set to fall by 8%, or as much as 10% in the event of a second wave.
Switzerland's lockdown wasn't particularly stringent or long-lasting, but collapsing consumer spending as well as other factors such as the enormous decline in tourist numbers have eaten away at the country's economy, which contracted by 2.6% in the first quarter of this year. OECD predictions for 2020 as a whole aren't too rosy either with a possible fall in GDP of 7.7%, or 10% in the worst-case scenario.
The COVID-19 pandemic arrived later in Russia but has been particularly severe with the country now the third most affected in terms of infections. Despite low commodity prices, GDP came in at a respectable 1.6% during the first three months of 2020. Needless to say, the financial consequences from the virus are likely to be harsh with GDP for the full year plummeting by 8%, or up to 10% in a second-wave scenario according to the OECD.
Apart from the tiny city-state of San Marino, Belgium has reported more COVID-19 deaths per million people than any other country. The virus has, as you might expect, wrought extreme damage on the economy, which contracted by 3.6% in Q1, the sharpest drop on record. Adding to the gloom, this year GDP may fall to -8.9%, or in the event of a second wave go as low as -11.2%.
Italy has been ravaged by coronavirus. The former epicenter of the pandemic, the country, which has reported one of the world's highest COVID-19 death tolls, was under a major lockdown during the latter stages of Q1, hence a GDP figure fpr that quarter of -5.3%. OECD analysts predict the Italian economy is likely to wither by 11.3% this year and could contract by up to 14% if a second wave comes to pass.
The UK saw GDP fall 2% in the first three months of this year, and since then has reported the world's third highest COVID-19 death toll despite entering into lockdown on the evening of 23 March. The country has launched financial measures to help businesses and individuals weather the storm, but the dire economic effects are starting to become a reality as the UK saw GDP fall by 20.4% in April, the biggest drop since monthly records began in 1997. These figures have kickstarted what the Bank of England predicts will be the deepest recession for the UK in more than 300 years. The OECD predicts GDP of -11.5% this year, with this worsening to -14% if there is a second wave of the pandemic.
France is among the European countries with high infection and death rates that have responded with strict lockdowns, which have contributed to their respective economic meltdowns. The French economy contracted by 5.3% in the first quarter of 2020 and OECD data predicts it may shrink by 11.4% in the year as a whole, or as much as 14.1% if a second wave hits.
On top of being one of the worst affected countries in terms of infection rate and death toll, Spain is in the midst of a financial catastrophe brought upon by COVID-19. A strict nationwide lockdown that started on 14 March contributed to the decline in GDP of 5.2% during Q1, and the predictions are far from reassuring. The OECD projects a GDP contraction for this year of up to 14.4%, with unemployment potentially skyrocketing to over 25%.
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