The global economic recovery provides governments with an opportunity to move from one emergency to the next, and to monitor spending, says the OECD.
The Paris-based agency says global output will rise by 5.8% this year, the highest of a 4.2% forecast for December. A 4.4% growth next year could bring global epidemic momentum, he added.
However, the OECD also warned that recovery would not be the same and that the economic situation in many developed countries would continue to decline before the outbreak.
New forecasts show that in the US, thanks to financial incentives and Covid-19 vaccine programs, the economic impact by the end of 2022 would have been much lower than expected in November 2019.
The same is true of China and, to a lesser extent, Germany. But production in many European countries, especially those that rely on tourism, will be much lower before the epidemic. The deficit will be large in the coming markets: India’s exports will be about 10% below the November 2019 forecast.
Meanwhile, the deterioration of economic power could be the worst among the G7 countries especially in the UK, where the devastation of the epidemic will be exacerbated by Brexit, the OECD said.
“As countries shift to optimism, it can be dangerous to believe that governments are already doing enough to promote growth in a positive and positive way,” said Laurence Boone, chief economist at OECD.
The assistance that many countries provide to businesses and families has helped save people’s money and reduce economic damage, he said.
But the crisis underscored the need for improved health and education systems, as well as funding for digital transformation and climate change. As some sections have been reopened, while others are still restricted, aid should be more focused and “financially targeted,” Boone said.
The biggest threat to future OECD predictions was the failure to ensure that the Covid vaccine reached developing and low-income countries.
“The global economic and social cost of protecting closed borders is less than the cost of vaccination, testing and treatment access,” Boone said.
Another concern was the high levels of debt that small and medium enterprises have, especially in European countries that promote business support mainly through credit, not finance.
The OECD said one way would be to divert some of the debt-related debt into donations, and to repay loans according to performance and to monitor progress.
Boone was particularly pleased with the risks of inflationary measures – in the US in particular – which are exacerbating inflation.
Prices are likely to rise temporarily, the OECD acknowledged, due to overcrowding in ports and barriers in some areas that were re-opening rapidly.
But given the assumption that there was a slowdown in labor markets that could have halted wages, labor prices should be much lower in OECD countries by the end of 2022.