OECD raises global growth forecasts for 2021 and 2022

This is due to vaccination and the planned economic aid package in the United States.

The global economic outlook has improved as the adoption of the COVID-19 vaccine accelerates in some countries, and the United States launches a broad new stimulus package, the Organization for Economic Cooperation and Development said on Tuesday, raising its forecast.

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

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

However, the improved outlook for the global economy depends on many factors, including how fast vaccination will go, how soon quarantine restrictions will be lifted, and whether it will be possible to contain the spread of new variants of the coronavirus.

“Not getting vaccinated fast enough could weaken the impact of the stimulus measures taken,” Laurence Boone, the OECD’s chief economist, said at an online press conference.

In Europe, for example, government money invested in the economy risks ending up in consumers ‘ savings if they can’t soon return to a more normal life, Boone said.

Global gross domestic product is expected to return to pre-crisis levels by the middle of this year, although this process will be uneven across countries.

“The rate of vaccination is not high enough to consolidate the recovery. We need to act much faster and more effectively,”

Boone said.

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

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

The organization believes that the fiscal package will increase US production 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 a year in the first two years.

According to the OECD, the package will positively impact the main US trading partners, increasing the growth rate by 0.5-1 percent in Canada and Mexico and by 0.25–0.5 percent in the euro area and China.

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Author: Steve Cowan
Graduated From Princeton University. He has been at the Free Press since October 2014. Previously worked as a regional entertainment editor.
Function: Chief-Editor
Steve Cowan

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