Efforts to contain the spread of Covid-19 are economically damaging, but they’re necessary, says the Organization for Economic Cooperation and Development (OECD) — which calls on governments to do more to cushion the economic impact.
The Paris-based OECD released updated projections of the economic impacts from the pandemic, estimating that every month of containment efforts will shave two percentage points from annual GDP, and that many economies will fall into recession.
It estimated that the advanced economies and major emerging markets (EMs) could see output reductions of 15% or more.
“This is unavoidable, as we need to continue fighting the pandemic,” it said, noting that stricter containment measures are needed to prevent worse damage.
“The high costs that public health measures are imposing today are necessary to avoid much more tragic consequences and even worse impact on our economies tomorrow,” said Angel Gurría, secretary-general of the OECD.
“Millions of deaths and collapsed healthcare systems will decimate us financially and as a society, so slowing this epidemic and saving human lives must be governments’ first priority.”
Given the severe economic impact, the OECD also said that governments should unleash stronger, more coordinated measures to help absorb those effects.
Among other things, it called for governments to take measures to: recapitalize health and epidemiological systems; mobilize all monetary, fiscal, and structural policies; lift existing trade restrictions; support workers and businesses; and provide support to vulnerable developing and low-income countries.
“Our analysis further underpins the need for sharper action to absorb the shock, and a more coordinated response by governments to maintain a lifeline to people and a private sector that will emerge in a very fragile state when the health crisis is past,” Gurría said.