OECD shows concern about “alarming levels” of debt and increasing inequalities caused by the pandemic

Ruben Pires 01 December 2020, 11:12

The OECD Economic Outlook shows that China, Canada, the United States, and Russia already have debt levels above those achieved during the financial crisis. In addition to increasing inequalities, the OECD also warns of rising youth unemployment in several countries.

The Organization for Economic Cooperation and Development (OECD) called attention to the increase in debt to "alarming levels", in its most recent Economic Outlook, presented this Tuesday.

The OECD Economic Outlook shows that debt levels in countries like China, Canada, the United States, and Russia are already above those achieved during the financial crisis.

OECD Director-General Angel Gurria warned of a 20% increase in the ratio of debt to the projection of Gross Domestic Product (GDP) for 2020 and 2021, as a result of the combination of the increase in debt but also the decrease in GDP .

The OECD report also says that in the pandemic, smaller and younger firms have been under higher stress levels compared to larger companies.

The pandemic has also brought about an increase in inequalities among the world population, as well as an increase in youth unemployment levels. Spain, Italy, Turkey, Austria are some of the countries that in 2019 had more youth unemployment than they did in 2007.

The OECD also says that families with lower incomes are more vulnerable in home school settings, compared to those with higher incomes.

The OECD Economic Outlook predicts a 4,2% decline in the world economy in 2020 and a 4,2% growth in 2021 and 3,7% in 2022.

For Portugal the projection is for economic growth of 1,7% in 2021 and 1,9% in 2022.

In the presentation of the Economic Outlook, the OECD director general, Angel Gurria, said that optimism has increased, that there is hope, but that "we are not yet out of danger".

Cooperation is essential to beat pandemic

Gurria highlighted the various vaccines that have been developed to combat covid-19, and to increase the resilience of health systems.

"Beating the virus is the only effective way to protect people and economies," said Gurria, adding that governments must continue to mitigate the impact of the pandemic on people, stressing that cooperation between countries is essential to achieve this goal.

Dombrovskis: "It is feasible that Portugal could be one of the first countries to have the recovery plan approved"

In an interview with Jornal Económico, the vice-president of the European Commission says that the draft of the Portuguese Recovery Plan “goes in the right direction”, emphasizing that the community executive continues to work with the Government in the component of the plan's reforms.

Dombrovskis: “Portugal is a good example of a country that took advantage of the good times in the economy to lower the debt level”

The Vice-President of the European Commission praises, in an interview with Jornal Económico, the trajectory of the reduction of the public debt to GDP ratio made by Portugal in recent years and underlines the importance of recovery plans. “It is difficult for countries to come out of this crisis alone”, he adds.