UK could suffer the worst GDP decrease due to Covid-19 according to new stats

  • The UK economy is expected to suffer the worst economic damage from Covid-19 according to a new report by the Organisation for Economic Cooperation and Development (OECD).

    The OECD is forecasting a drop in GDP across the world as a result of the Covid-19 outbreak, with the UK coming out with the worst predicted damage. The UK GDP is expected to shrink 11.5% in 2020, with France a close second at 11.4%, Italy at 11.3%, and Spain at 11.1%.

    These figures compare to just 7.3% in the US, 8.0% in Russia, and as low a 2.6% in China, which was hit first by the virus but was reportedly able to get it under control after an intense lockdown period. The figures represent a decrease in the total national income of the country's workforce throughout 2020, and has been used as a predictor of economic health at the country level.

    A severe economic downturn is expected across the world, with levels of government and private debt growing, and other predictions published on Friday have shown that GDP could contract by up to 20.4%. PwC's Chief Economist, Jonathan Gillham, commented on the potential severity of those statistics:

    "A 20.4% decline in GDP is clearly unprecedented, but not unexpected. The economy is now roughly 26% smaller than it was in July last year. This contraction has been driven by a massive hit to construction (40% smaller than last month) and manufacturing (-24%), which fared even worse than services (-19%)."

    "This data underlines that the effectiveness of the response from both the Government and the business community remains critical to limiting the longer term scarring to the economy through business failures and unemployment. If this response is effective, we would expect a quicker economic recovery than we saw after the financial crisis, even though the short-term fall in output will be much steeper due to the lockdown."

    Source: The Guardian, PwC

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    Brendan is a Sync NI writer with a special interest in the gaming sector, programming, emerging technology, and physics. To connect with Brendan, feel free to send him an email or follow him on Twitter.

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