OECD Raises Global Economic Growth Forecast to 5.8% This Year, Up 0.2 Percentage Points

Publication of OECD Economic Outlook Report
By the end of next year, most of the world's GDP to recover to pre-pandemic levels

[Asia Economy Reporter Song Seung-seop] An analysis has emerged that the global economy is gradually improving thanks to the expansion of COVID-19 vaccination. Along with this, a scenario was also presented where if the vaccination speed does not support expectations and variant viruses spread, the economic growth rate could plummet again.

According to the economic outlook report published by the Organisation for Economic Co-operation and Development (OECD) on the 31st, the forecast for global economic growth this year was presented at 5.8%. This is 0.2 percentage points higher than in March. By the end of next year, most countries worldwide are expected to recover their gross domestic product (GDP) to pre-COVID-19 pandemic levels.

It was anticipated that a full recovery of living standards would take a considerable amount of time. Even OECD member countries, which include many advanced nations, are diagnosed to achieve this only by the end of 2022.

Among the Group of Twenty (G20), India had the highest growth forecast at 9.9%. However, this was revised downward by 2.7 percentage points from March due to the spread of COVID-19 variant viruses. China, expected to grow by 8.5% and ranked second highest, faced risks such as the possibility of fiscal policy tightening and an increase in corporate debt. Following were the United Kingdom (7.2%), the United States (6.9%), and Argentina and Canada (6.1%).

In addition, Japan's production flow was favorable due to expanded external demand, but lockdown measures constrained consumption, leading to expected growth of 2.6% this year and 2.0% next year. The Eurozone experienced somewhat sluggish growth in the first quarter of this year, but with accelerated vaccination, it is forecasted to grow by 4.3% this year and 4.4% next year.

Laurence Boone, OECD Chief Economist, evaluated this as an impressive outlook considering the global economy shrank by 3.5% last year. However, Boone warned, “It is concerning that vaccines have not sufficiently reached emerging and low-income countries,” adding, “Unless the majority of the global population is vaccinated, everyone will inevitably remain vulnerable to the emergence of new variant viruses.”

The OECD analyzed that if COVID-19 vaccination proceeds quickly and completely, the global growth rate could rise to 6.5% this year and 5-6% next year. Conversely, if vaccination is delayed and variant viruses spread widely, it could fall to 5% this year and 3% next year.

Therefore, the OECD argued that international cooperation is essential to rapidly distribute vaccines worldwide for economic recovery. It also demanded maintaining accommodative monetary policies and continuing expansionary fiscal policies focused on the affected groups.

This content was produced with the assistance of AI translation services.