Global economic watchdog warns that coronavirus may shrink world economy

Posted at 7:13 AM, Mar 02, 2020

A global agency says COVID-19, better known as coronavirus, could make the world economy shrink this quarter. That would be a first since the international financial crisis more than a decade ago.

The Organization for Economic Cooperation and Development says the world economy is still expected to grow overall this year and rebound next year. But it lowered its forecasts Monday for global growth in 2020 in a special report about the effect of the coronavirus.

It said China's reduced production is hitting Asia particularly hard, and economists worry that as the disease spreads worldwide, it will cause more quarantines and create more concern among consumers. Consumer fear could cause people to cancel travel plans, avoid stores and stay home from work.

It urged governments to act fast to prevent contagion and restore consumer confidence — both economically by lowering interest rates and by instituting health policies that will prevent the spread of the virus.