2 Tackling the fallout from
COVID-19
Laurence Boone
OECD
The novel coronavirus, COVID-19, hit China at the start of December and outbreaks
have since spread more widely. The virus is bringing considerable human suffering. It
is also resulting in significant economic disruption from quarantines, restrictions on
travel, factory closures and a sharp decline in many service sector activities. These
disruptions are the direct channels through which the virus is affecting economies.
There is ample reason to be cautious when assessing the economic consequences of
the epidemic, given that the situation is evolving by the day. The main question for the
economic outlook is for how long and how widely the virus will spread, and with it the
containment measures. At this stage, there is little certainty on this, so we draw a best-
case scenario and a downside scenario (OECD 2020).
- The base-case scenario (the contained outbreak scenario in Figure 1) is based on
the knowledge we have today of the spread of the epidemic, where the extent of the
virus is broadly contained in China with some outbreaks in other countries. In this
scenario, global economic growth would slow sharply in the first half of 2020, and
then it would recover modestly. - We also consider an alternative, downside scenario (Figure 1) where there is broader
contagion of the virus across the Asia-Pacific region and other advanced economies
in Europe and North America. That means more containment measures, a wider
decline in confidence, and a much more marked and prolonged slowdown.