OECD gives brighter outlook on economy as vaccine rollout continues

Prospects for the world economy have brightened as the coronavirus vaccine rollout continues but the recovery is likely to remain uneven, revealed the Organisation for Economic Cooperation and Development in its latest Economic Outlook.

The OECD has revised up its growth projections across the world’s major economies since its last full Economic Outlook in December 2020.

It now sees global GDP growth at 5.8 % this year (compared with 4.2% projected in December), helped by a government stimulus-led upturn in the United States, and at 4.4% in 2022 (3.7% in December).

In many advanced economies, as more and more people are being vaccinated, government stimulus is helping to boost demand and businesses are adapting better to the restrictions to stop the spread of the virus, the report forecasts a significant growth. But elsewhere, where state aid and the vaccination programs are slower, the economic recovery will be modest.

According to the report, the world economy has now returned to pre-pandemic activity levels, but real global income will still be some $3tn less by the end of 2022 than it would have been without a crisis.

The OECD warned that the bright outlook depends on the risks of new outbreaks and that recovery will be uneven and remain vulnerable to fresh setbacks.

OECD Chief Economist Laurence Boone said: “Our latest projections provide hope that in many countries, people hit hard by the pandemic may soon be able to return to work and start living a normal life again. But we are at a critical stage of the recovery. Vaccination production and distribution have to accelerate globally and be backed by effective public health strategies.”

“Stronger international cooperation is needed to provide low-income countries with the resources - medical and financial - required to vaccinate their populations. Trade in healthcare products must be allowed to flow free of restrictions.”

Boone added that income support for people and businesses should continue but evolve and adapt in line with the strength of the economy and the health situation.