File Photo: The Organization for Economic Cooperation(OECD) logo. AP
The Organisation for Economic Co-operation and Development (OECD) has revised its expectation for the global economic growth upwards to 5.8 percent in 2021, up from the 4.2 percent it projected in December 2020.
In its updated report on the global economic outlook, released on Monday, the OECD attributed the sharp increase in its projection to the vaccine rollout in many of the advanced economies and the massive fiscal stimulus the US is adopting.
For 2022, the OECD projected global GDP growth to slow down to 4.4 percent, while expecting global income to remain some $3 trillion less by the end of 2022 than was expected before the crisis hit.
The report also expected the global output to increase by nearly 6 percent in 2021 this year, following a 3.5 percent contraction in 2020.
Yet, the report expected global output to remain weaker at the end of 2022 than expected prior to the pandemic, as the risk of lasting costs from the pandemic remains high.
“This is particularly the case in many emerging-market economies, with the output shortfall in the median economy at the end of 2022 projected to be around 3.5 percent, more than twice than that in the median advanced economy,” the report explained.
Growth in the OECD area projected to rise to 5¼ percent in 2021, but to decline to 3¾ percent in 2022, according to the report.
Despite most countries are expected to approach their pre-pandemic GDP levels by end of 2022, the global economy remains below its pre-pandemic growth path, and living standards will not be back to the level expected before the pandemic, according to the report.
Also, the report noted that the world will not witness an ordinary recovery due to the uncertainty that the spread of the pandemic imposes over the short-term, with high levels of infections still occurring in some countries.
“It will take some time before production can be raised sufficiently and vaccines distributed to all in need, and risks remain from potential mutations of the virus resistant to current vaccines. Vaccination campaigns are proceeding at different rates around the world, often starting more slowly than initially planned, and the scale of policy support and sectoral specialisation differ considerably across economies,” the report explained.
For emerging markets, signs of early completion of vaccinations are limited in many of these economies, while current and further virus outbreaks in some countries are expected to require tighter public health measures to be maintained in the near term, according to the report.
Providing additional macroeconomic policy support is also limited in many of these countries, according to the report.
It also expected that tourism-dependent economies will face a slow recovery, and household real incomes will be adversely affected by higher energy and food costs.