The world economy is projected to shrink by 4.5 percent in 2020, according to updated estimates the Organization for Economic Cooperation and Development (OECD) released Wednesday, less than the 6 percent contraction it predicted in June.
"The forecasts are less negative than those in OECD’s June Economic Outlook, due primarily to better than expected outcomes for China and the United States in the first half of this year and a response by governments on a massive scale," the report said.
"However, output in many countries at the end of 2021 will still be below the levels at the end of 2019, and well below what was projected prior to the pandemic," it added.
The report also warned that failure to keep the coronavirus under wraps could lead to far worse outcomes, with a resurgent outbreak cutting an additional 2-3 percentage points from global growth in 2021.
In the U.S., the OECD projects the economy will shrink by 3.8 percent this year before rebounding 4 percent in 2021. That estimate is 3.5 points higher than the previous projection, a sign of a the unexpectedly quick return of jobs and economic activity despite steadily growing COVID-19 cases and deaths.
The report pegs China, which was hit earliest with the outbreak but also staged a quick recovery, as the only major country expected to grow in 2020.
The euro area, meanwhile, is expected to see a 7.9 percent contraction this year followed by a more modest 1.2 percent recovery in 2021.
Major industrialized countries should expect even bigger hits, including the United Kingdom at 10.1 percent and France at 9.5 percent, while Germany, which has earned praise for its containment efforts, will see a more moderate 5.4 percent decline.