The Organization for Economic Cooperation and Development said on Tuesday that, the world economy is on track to return to its pre-pandemic state by the middle of the year 2021 thanks to the $1.9 trillion fiscal package that will increase 3 percentage points to U.S growth.
Global gross domestic product growth is now expected at 5.6% this year, more than 1 per cent above the OECD’s December forecast, thanks to the COVID-19 vaccine rollout and the U.S. stimulus. The world economy is seen to be expanding by 4% in 2022. The U.S and Chinese economy would increase by 6.5%, 7.8% this year respectively and the Eurozone by 3.9%. France and Italy, with GDPs increased by 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. The organization 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”. According to the OECD report demonstrates the magnitude of the “welcome demand spill overs” 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.
As reported by OECD, this year Germany and Italy will be among the growth laggards, due to the difficulties 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. Due to the slow 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.