OECD ups forecasts for global growth

The OECD has strengthened its growth forecasts for the global economy, citing the ongoing success of the vaccine rollout and the US’s mammoth stimulus package.

But the Paris-based body also warned that a faster and more effective global rollout for the vaccine remained "critical".

Publishing its interim economic outlook, the Organisation for Economic Cooperation and Development said: "Activity in many sectors has picked up and adapted to pandemic restrictions over recent months.

"Vaccine deployment, although uneven, is finally gaining momentum and government fiscal stimulus, particularly in the US, is likely to provide a major boost to economy activity."

The OECD now believes the global economy will grow by 5.6% in 2021, and by 4% in 2022. That is an increase on its previous forecasts, made in December, for growth of 4.2% this year and 3.7% next year.

In the US, GDP growth is projected to be 6.5% in 2021, an upward revision of more than 3 percentage points.

America’s planned $1.9trn stimulus package is expected to boost US output by around 3%-4% on average in its first year. But it is also set to benefit other countries, with the OECD believing it will add more than a percentage point to global growth.

In China, GDP growth is forecast to be 7.8% in 2021, while in the UK, it is expected to be 5.1% this year and 4.7% next year.

In the Eurozone, where the pace of vaccination is notably slower, GDP is expected to rise by 3.9% this year, an upward revision of only 0.3 percentage points.

OECD secretary general Angel Gurría said: "Speed is of the essence. There is no room for complacency. Vaccines must be deployed faster and globally.

"This will require better international cooperation and coordination that we have seen up to now. It is only by doing so that we can focus our attention on building forward better and laying the foundations for a prosperous and lasting recovery for all."

The OECD also warned that the pandemic was widening gaps in economic performance between countries, which in turn was increasing social inequalities and risking long-term damage to living standards.

Laurence Boone, the OECD’s chief economist, said: "If we don’t get enough people vaccinated quickly enough to allow restrictions to be lifted, the recovery will be slower and we will undermine the benefits of fiscal stimulus."