OIC Economic Outlook 2020
Date : 02 November 2020

The OIC Economic Outlook 2020 is SESRIC`s flagship report which explores global macroeconomic trends with the focus on the OIC countries as a group and provides a wide-range of useful statistics and analyses, including the comparison of OIC countries’ economic performance with the developed countries, the non-OIC developing countries and the world average.

The current edition of the Report is prepared at a time when the level of uncertainty in the global economy is at its peak due to rising protectionism and the emergence of the COVID-19 pandemic. The global economy is expected to contract by 4.9% in 2020, while developed economies bearing the real brunt of the pandemic with a staggering drop of 8% in their GDP growth. The OIC economies which recorded a growth rate of 2.4% in real terms are also expected to contract by 2% in 2020 with a recovery to be followed in 2021.

Following the breakout of the pandemic, the estimates of global trade flows were significantly revised downward. In line with the global trends, OIC countries have witnessed a slowdown in their total exports to the world and their aggregate exports decreased to US$ 1.79 trillion in 2019. With respect to the export flows from OIC countries in 2020, it is expected that the total exports could fall between 17% and 33%, depending on alternative scenarios. Intra-OIC export flows have been steadily increasing since 2016 from a level of US$ 254 billion to reach US$ 331 billion in 2019. Over the last three years, intra-OIC exports increased by more than 30%, which is a significant achievement. This trend is expected to be reversed during 2020 with an expected fall of between 4.9% and 14.9%.

FDI flows to OIC countries generally remained lower than their potential and reported at US$ 106.7 billion in 2019, which was 3.6% lower than the 2018 value of US$ 110.7 billion. Amid the uncertainty, global investment flows are estimated to decline by around 40% in 2020. The OIC countries are also expected to be affected at similar levels. Over the last several years, the OIC member countries witnessed a sharp deterioration in their fiscal balance. High dependence on commodity and primary goods exports makes many OIC countries particularly vulnerable to price fluctuations. There were ten OIC countries with a fiscal balance surplus in 2018. This number decreased to eight in 2019.

OIC countries continue to record significantly higher average unemployment rates compared to the world, developed countries and non-OIC developing countries. Since 2014, the total unemployment rate in OIC countries has been on the rise to reach 6.7% in 2019 as compared to 5.9% in 2014. The unemployment rate for the youth labour force (14.5% in 2019) is typically higher than the rates for adults in all country groups. Amid the COVID-19, the ILO expects around 25 million increase in the number of unemployed people worldwide, which means an additional 6 to 8 million unemployed people in OIC member countries.

The special section of this Report focuses on trade and integration challenges and opportunities amid the rising uncertainties concerning trade protectionism and the COVID-19 pandemic. These shocks could be detrimental for OIC countries that are already well integrated into global value chains while offering some opportunities to benefit from the reorientation of supply chains. To avail these opportunities, OIC countries need to reduce trade costs, improve technological capacities and increase their preparedness to meet supply chain risks.

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