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Coronavirus (COVID-19): Joint

The coronavirus pandemic is causing large-scale loss of life and severe human suffering. It is a public
health crisis without precedent in living memory, which is testing our collective capacity to respond.
The pandemic brings with it the third and greatest economic, financial and social shock of the 21st Century,
after 9/11 and the Global Financial Crisis of 2008. This shock brings a double whammy: a halt in production
in affected countries, hitting supply chains across the world, and a steep drop in consumption together with
a collapse in confidence. Stringent measures being applied, albeit essential to contain the virus, are
thrusting our economies into an unprecedented “deep freeze” state, from which emergence will not be
straightforward or automatic.
The most urgent priority is to minimise the loss of life and health. But the pandemic has also set in motion
a major economic crisis that will burden our societies for years to come. In many places ambitious initial
responses are underway, and this is commendable. But only a combined, coordinated international effort
will meet the challenge.
The sheer magnitude of the current shock introduces an unprecedented complexity to economic
forecasting. The OECD Interim Economic Outlook, released on 2 March 2020, made a first attempt to take
stock of the likely impact of COVID-19 on global growth, but it now looks like we have already moved well
beyond even the more severe scenario envisaged then. The behaviour of financial markets reflects the
extraordinary uncertainty of the situation. It is looking increasingly likely that we will see sequential declines
in global GDP--or regional GDPs-- in the current and next quarters of 2020. And while it is too early to tell
how far-reaching an impact COVID19 will have on many developing countries, particularly those in sub-
Saharan Africa, it is clear that even if they are fortunate enough to escape the brunt of the health crisis,
they will suffer economically, just as they did after the 2008 crisis. We are closely monitoring events and
will be updating our analysis regularly.
Compounding a global health crisis with a major economic and financial crisis will put large strains on our
societies. Even after the worst of the health crisis has passed, people will be confronted with the jobs crisis
that will ensue. Well before the outbreak, the global economy already exhibited a number of underlying
vulnerabilities, which now risk worsening the downturn that COVID-19 has delivered. These include the
high level of corporate debt and trade tensions between major economies. Another important vulnerability
are the gaps in income, wealth and job stability in many countries, which threaten a large part of our
populations. More than one third of OECD households are financially insecure, meaning they would fall
into poverty if they had to forgo three months of their income. As for the trade restrictions that have
proliferated in the last few years, these may not only affect badly-needed medical supplies in some settings
but also generate supply-chain disruptions in food or other essential goods and services. More broadly,
they increase the risk of a more severe outbreak, as well as of a deeper and longer-lasting recession.

CORONAVIRUS (COVID19): JOINT ACTIONS TO WIN THE WAR © OECD 2020

Now is the time for urgent and large-scale responses, to be taken at sub-national, national and international
levels. They must be launched at once, taking into account different time horizons and imperatives: a) the
immediate need to address the public health crisis ; b) the subsequent need to get the economy up and
running again; and c) the longer-term need for new policy approaches to repair the damage and ensure
that we are better prepared for future shocks. The OECD is leveraging its multi-disciplinary expertise to
guide and support such actions.
The COVID-19 crisis has laid bare stark weaknesses in our health care systems, from the number of
intensive-care beds to the size of the workforce, the inability to provide enough masks and to deploy testing
in some countries, and deficiencies in the research for and supply of drugs and vaccines.
Beyond the immediate health policy response, the world needs decisive and ambitious actions to mitigate
the economic downturn and protect the most vulnerable. This is all about people: older people and the
young, women and men, those on low income or no income, those who were already facing a difficult
situation and who will be hit hardest.
Only with immediate, large-scale and co-ordinated actions will the economy be ready for a quick and
vigorous restart. It is encouraging that many major efforts and initiatives have already been announced,
but greater international co-ordination is fundamental to ensuring these initiatives produce the best results,
reassure markets and support the most vulnerable countries. Co-ordination among Central Banks is
commendable, the recent statement by the G7 is powerful and gives some clear directions and the G20
will be holding an extraordinary virtual Leaders’ meeting next week, but much more coordination, across
the whole breadth of policy areas, is urgently needed.
The OECD calls for a sizeable, credible, internationally co-ordinated four-pronged effort to provide the
necessary resources to deal with the immediate public health emergency, to buffer the economic shock
and develop a path towards recovery.
1. Governments should ensure more international co-operation in responding to the health challenge.
Impressive co-ordination in the scientific effort is ongoing but it needs to be complemented by
measures to ensure that vaccines and treatments, after being developed and produced, get to
people as quickly as possible. Had a vaccine for the SARS-CoV-1 been developed at the time, it
would have accelerated the development of one for the current outbreak given that the two viruses
are 80% similar. Today, regulatory agencies (the FDA in the US, the European EMA, among
others) should work together to remove regulatory hurdles for vaccines and treatments.
2. Governments should advance joint policies, rather than taking them in an uncoordinated way. They
should finance an immediate buffer to economies to cushion the negative impact and speed up the
recovery. This includes immediate spending on:
a. Health care: extensive testing; treatment for all patients, regardless of whether they are insured
or not; support to health-care workers; return of health-care retirees, while protecting high-risk
groups; the enhanced provision of masks, ICUs and respirators, among others;
b. People: short-term employment schemes, reduced requirements to benefit from
unemployment insurance, cash transfers to the self-employed and support to the most
vulnerable;
c. Firms: charges and tax payment delays, temporary VAT reductions or deferrals, enhanced
access to working capital through credit lines or state guarantees, special support packages
for SMEs, especially those in services and tourism.
A well planned investment programme – co-ordinated among countries – notably in health
research, development and infrastructures, should be given priority after the height of the crisis.
3. Central Banks have already launched bold actions to support the economy but financial regulation
and supervision is another area where co-ordination could produce better outcomes. The economic
dislocation caused by the COVID-19 crisis is hitting the functioning of financial markets, banks’

CORONAVIRUS (COVID-19): JOINT ACTIONS TO WIN THE WAR © OECD 2020

incomes and balance sheets. A co-ordinated approach to monitoring, diagnosing emerging strains
and taking regulatory action would yield much more positive results than disjointed and inconsistent
responses.
4. Everything must be done to restore confidence. While the key to that is bringing the virus outbreak
under control, it would also help to address the factors that were sapping confidence even before
COVID-19 appeared on the scene, including by removing trade restrictions.
Today, as part of the OECD’s response to this crisis, we are launching a platform that will provide timely
and comprehensive information on policy responses in countries around the world, together with OECD
advice, in some cases. We will also be releasing a series of policy briefs on a range of subjects in the
context of the COVID-19 crisis: on vaccines, taxes, education, SMEs, etc. Thus, we hope to help
governments learn from each other in real time, facilitate co-ordination, and contribute to the necessary
global action when confronting this enormous collective challenge.
In our global world, many issues cannot be dealt with anymore within domestic boundaries, be it a virus,
trade, migration, environmental damages or terrorism. Multilateral action creates positive spillovers that
will be more effective for each country than if they acted alone.
We need a level of ambition similar to that of the Marshall plan – which created the OECD – and a vision
akin to that of the New Deal, but now at the global level.
Cool heads, individual and collective discipline, a heightened sense of solidarity and a shared sense of
purpose will allow us to overcome these unexpected and challenging circumstances.

Angel Gurría
OECD Secretary-General

CORONAVIRUS (COVID19): JOINT ACTIONS TO WIN THE WAR © OECD 2020