The world economy is on track to be back to its pre-pandemic level by the middle of the year thanks to the $1.9 trillion fiscal stimulus package that will add 3 percentage points to U.S. growth this year, the Organization for Economic Cooperation and Development said. Global gross domestic product growth is now expected at 5.6% this year, more than 1 percentage point above the OECD’s December forecast, thanks to the COVID-19 vaccine rollout and the U.S. stimulus, it said. The world economy is seen expanding by 4% in 2022.
The U.S. economy would expand by 6.5% this year, China by 7.8% and the eurozone by 3.9%. France and Italy, with GDPs up 5.9% and 4.1% this year respectively, are the only major economies whose prospects were not upgraded by the OECD compared to its December forecast. They are also among the countries that have been slowest in rolling out proper vaccination campaigns, “Faster and more effective vaccination deployment across the world is critical” to keep the momentum of the ongoing recovery, the OECD warns. “More jabs, more jobs,” it adds. The organisation also notes that there “are increasing signs of divergence across countries and sectors,” and that “resources required to provide vaccines to lower-income countries are small compared with the gains from a stronger and faster global economic recovery.”
The OECD report illustrates the magnitude of the “welcome demand spillovers” that U.S. trade partners will benefit from after the Biden stimulus. It also underscores by contrast Europe’s need to both accelerate its vaccination campaigns and do more to stimulate its economy.
Germany and Italy will be among the growth laggards in the OECD this year, due to the problems they encountered in deploying the vaccines among their respective populations. And France, which is still struggling with vaccines, will only experience relatively fast growth this year because its GDP shrank by more than 8% in 2020, more than the European average. Slow to vaccine, Europeans are also late to stimulate. It took less than two months for the U.S. administration to conceive and push through Congress its mammoth stimulus bill. Europeans are still haggling over a joint stimulus package they agreed in principle last July.
MW
