OECD lowers global growth forecast for 2021 to 5.7 pct

The Organisation for Economic Cooperation and Development (OECD) said in its interim economic outlook released on Tuesday that the global economy is to grow by 5.7 percent this year, 0.1 percentage point down from its May forecast.

“Global GDP has now risen above its pre-pandemic level, and the recovery remains uneven with countries emerging from the crisis facing different challenges,” said the Paris-based organization.

The unevenness of the recovery, which reflects countries’ pre-COVID 19 strengths and weaknesses as well as their policy approaches during the pandemic, is worsened by large differences in vaccination rates between countries, it said.

The Chinese economy is expected to grow by 8.5 percent and 5.8 percent in 2021 and 2022, respectively, as in the May forecast.

The United States saw its 2021 outlook revised down from 6.9 percent in May to 6.0 percent. But the forecast for 2022 is upgraded to 3.9 percent from 3.6 percent in May.

The eurozone GDP is expected to grow by 5.3 percent in 2021, up from the 4.3-percent forecast in May. Its 2022 growth was revised up by 0.2 percentage points to 4.6 percent.

For the global outlook in 2022, the OECD upgraded its May forecast by 0.1 point to 4.5 percent.

The OECD noted that renewed outbreaks of the virus are forcing some countries to restrict activities, resulting in bottlenecks and adding to supply shortages.

“There is a marked variation in the outlook for inflation, which has risen sharply in the U.S. and some emerging market economies but remains relatively low in many other advanced economies, particularly in the euro area,” it said.

But the Interim Outlook said that these inflationary pressures should eventually fade. “Consumer price inflation in the G20 countries is projected to peak towards the end of 2021 and slow throughout 2022. Wage growth remains broadly moderate and medium-term inflation expectations remain contained,” it said.

To keep the recovery on track, the OECD urged stronger international efforts to provide low-income countries with the resources to vaccinate their populations, both for their own and global benefits.

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