Physical distancing, lockdowns and restrictive measures put in place worldwide to contain the COVID-19 pandemic triggered the most severe and abrupt global recession since the end of the Second World War. Admittedly, GDP declines recorded in 2020 were heterogeneous across OECD countries, reflecting the uneven impact of the pandemic throughout the economy, differences in economic specialisation, variations in the nature and timing of restrictions, and differences in fiscal and monetary policy across countries. However, (quarterly) GDP declines exceeded almost everywhere those recorded at the time of the 2007-09 financial crisis, often referred to as the Great Recession.
As of mid-2021, prospects for a path out of the crisis continue to improve, as shown by recent upward revisions in economic forecasts, but they remain uncertain and unequal across countries (OECD, 2021a). The brighter outlook is mainly related to the gradual deployment of effective vaccines, strengthened macroeconomic policy support, especially in the United States, and signs that economies are coping better with measures to contain the virus. Global economic activity has now returned to its pre-pandemic level, but at the end of 2022, it would still remain weaker than expected before the pandemic. There is also marked variation in the pace of recovery across countries. While swift policy actions have paved the way for the health and economic recovery, the risks of new virus outbreaks, with the appearance of variants in different places, and the challenges in deploying vaccines on such a scale, in particular in emerging and low-income economies, may weigh down on the recovery.
Beyond its aggregate impact, the recession affected economic sectors in different ways, both in terms of output and hours worked, reflecting the uneven effects of the temporary restrictions put in place to contain the propagation of the virus. In addition to the uneven impact on sectoral productivity, the crisis also induced reallocation of activity across sectors, with a positive effect on aggregate productivity in the short term. While there are exceptions, most of the hardest hit sectors indeed correspond to activities with low labour productivity levels (e.g. accommodation and restaurants, and household services). In the short term, this implied changes in the relative weights of economic sectors, which contributed to limit declines in aggregate labour productivity.
The widespread implementation of job retention schemes in most countries led to a disconnection between the number of persons employed and the number of hours worked during the COVID-19 crisis. For the purpose of economic analysis and to maximise the comparability of statistical series across countries (see below), it is better to focus on labour productivity per hour worked. Overall, the data available so far show significant cross-country discrepancies in labour productivity (per hour worked) developments between 2019 and 2020, with for example large increases in Canada, Italy and the United States, and overall stability in France and Germany. Looking ahead, the sectoral developments underlying these aggregate evolutions will need to be carefully analysed.