OECD raises growth forecast for vaccine deployments, US
A person rides a bicycle in front of the Marriner S. Eccles Federal Reserve building in Washington on Friday, January 22, 2021.
Al Drego | Bloomberg | Getty Images
The global economic outlook is improving as vaccine deployments allow companies to resume operations and the United States injects billions of dollars into the world’s largest economy, the OECD said on Monday, pushing its forecast to the rise.
The global economy is expected to grow 5.8% this year and 4.4% next year, the Organization for Economic Co-operation and Development said, increasing its estimates by 5.6% and 4.0% respectively. in its latest forecast published in March.
The global economy has now returned to pre-pandemic activity levels, but has yet to achieve the growth expected before the global health crisis, the OECD said in its latest publication on Economic Outlook.
“The world economy is currently navigating recovery, with a lot of friction,” OECD chief economist Laurence Boone said in an editorial in Outlook.
“The risk that sufficient post-pandemic growth will not be achieved or widely shared is high,” she added.
While vaccination campaigns allowed advanced economies to gradually reopen their doors, many emerging market economies were held back by slow vaccination deployment and further outbreaks of COVID-19, the OECD said.
The OECD said central banks in advanced economies should keep financial conditions relaxed and allow inflation to exceed their targets.
Significant reserve capacity in the global economy would help contain a sustained rise in inflation despite recent price pressures triggered by supply chain bottlenecks as economies reopen, he said. -he declares.
While confident that central banks would not be scared off by temporary price increases, Boone said she was less certain of financial markets, where she saw the risk of rising market rates and volatility.
Governments should maintain income support for households and businesses until vaccination is widespread enough to protect sectors most at risk, the OECD said.
Supported by a multibillion-dollar stimulus package, the US economy has grown 6.9% this year, the OECD said, against a previous forecast of 6.5%. It is expected to increase 3.6% in 2022, compared to 4.0% forecast in March.
The US stimulus package has been seen adding 3-4 percentage points to US growth and 1% to global growth while bringing the US economy back to pre-crisis levels by mid-2021.