Published: June 11, 2020 at 3:59 a.m. ET
Workers wearing face masks to help protect against the spread of coronavirus stage a rally against the government’s labor policy in Seoul, South Korea, on June 10, 2020. The head bands read “Unity and fight.”
The Organization for Economic Cooperation and Development released its twice-a-year economic outlook on Wednesday, and unusually, presented two scenarios — one where the coronavirus continues to recede, and another where a second wave of rapid contagion erupts later in 2020. OECD Chief Economist Laurence Boone said both forecasts are equally probable.
Both forecasts are sobering, but in the “single hit,” U.S. gross domestic product slides 7.3% in 2020 and grows 4.1% in 2021, and in the “double hit,” U.S. GDP slides 8.5% in 2020 and limps just 1.9% higher in 2021. The unemployment rate in the double-hit scenario shoots higher to 16.9% in the fourth quarter and falls to only 10% in the fourth quarter of 2021, whereas the jobless rate in the single hit slows to 10.4% this year and 8.2% in 2021.
Testing, tracking, tracing and isolating may not be enough to prevent a second outbreak of the virus, Boone said, and sectors such as tourism, travel, entertainment, restaurants and accommodation won’t return to normal as long as no vaccine or treatment is widely available.
“Even if growth does surge in some sectors, overall activity will remain muted for a while. Governments can provide the safety nets that allow people and firms to adjust, but cannot uphold private sector activity, employment and wages for a prolonged period,” he said, calling for more public investment in digital and green technologies.