OECD sees global economy turning the corner on coronavirus crisis

PARIS: The outlook for the global economy is improving despite a second wave of coronavirus outbreaks in many countries as vaccines emerge and a Chinese-led recovery takes hold, the OECD said on Tuesday.

The global economy will grow 4.2% next year and ease to 3.7% in 2022, after shrinking 4.2% this year, the Organisation for Economic Cooperation and Development said in its latest Economic Outlook.

After a second wave of infections hit Europe and the United States, the Paris-based policy forum trimmed its forecasts from September, when it expected a global contraction of 4.5% before a 5% recovery in 2021. It did not have a 2022 forecast at the time.

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“We’re not out of the woods. We’re still in the midst of a pandemic crisis, which means that policy still has a lot to do,” said OECD chief economist Laurence Boone.

Overall global gross domestic product will return to pre-crisis levels by the end of 2021, led by a strong recovery in China, the OECD said.

But that masked wide variations among countries, with output in many economies expected to remain about 5% below pre-crisis levels in 2022.

China will be the only country covered by the OECD to see any growth at all this year, at 1.8%, unchanged from the last forecast in September. It will gain speed to 8% in 2021 – also unchanged – before easing to 4.9% in 2022.

The United States and Europe are expected to contribute less to the recovery than their weight in the global economy.

After contracting 3.7% this year, the U.S. economy will grow 3.2% in 2021 and 3.5% in 2022, assuming a new fiscal stimulus is agreed. In September, the OECD had forecast a contraction of 3.8% this year and a rebound of 4% next year.

The euro area economy will contract 7.5% this year, with many economies finishing the year in a double-dip recession after re-imposing lockdowns. Its economy will see growth return in 2021 at 3.6% and 3.3% in 2022.

Though hard hit, the forecasts were an improvement from September, which had foreseen a contraction of 7.9% this year and a 5.1% rebound in 2021.

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