OECD raises global growth forecasts for 2021 and 2022

OECD raises global growth forecasts for 2021 and 2022

This is due to vaccinations and the planned US economic aid package

The global economic outlook has improved as some countries accelerate the introduction of the COVID-19 vaccine and the United States launches an extensive new stimulus package, the Organization for Economic Cooperation and Development said Tuesday, raising its forecast.

According to the OECD’s interim economic forecast, the world economy will grow by 5.6 percent this year and 4 percent next year.

The numbers are up significantly from early December when the organization forecast global growth of 4.2 percent this year and 3.7 percent next year.

However, improving the outlook for the global economy depends on many factors, including how quickly vaccinations go, how soon quarantine restrictions will be lifted, and whether the spread of new variants of the coronavirus can be contained.

“Vaccination not fast enough could weaken the impact of the stimulus measures taken,” OECD chief economist Laurence Boone told an online news conference.

For example, in Europe, government money invested in the economy risks ending up in the savings of consumers if they cannot soon return to a more normal life, Boone said.

It is assumed that by the middle of this year, the global gross domestic product will return to pre-crisis levels, although this process will be uneven in different countries.

“The vaccination rate is not fast enough to consolidate the recovery. We need to act much faster and more efficiently, ”Boone said.

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In addition to vaccinations, the planned $ 1.9 trillion US economic aid package should also have a positive effect, which will spread to other countries, adding more than a percent to global growth.

The OECD estimates the US economy will grow 6.5 percent this year and 4 percent next. In December, growth was projected to be 3.2 percent in 2021 and 3.5 percent in 2022.

The organization believes the fiscal package will increase US output by an average of 3-4 percent in the first full year.

The injection of government funds into the economy could create up to 3 million jobs in the US by the end of the year, but the package could also increase inflation by an average of 0.75 percentage points per year in the first two years.

The OECD said the package will benefit major US trading partners, boosting growth by 0.5-1 percent in Canada and Mexico and 0.25-0.5 percent in the euro area and China.