The Organization for Economic Cooperation (OECD) Tuesday cautiously upgraded its 2021 global economic forecast, citing vaccine rollouts and the U.S. stimulus package passed last week as positive signs.
At a virtual news conference at the organization's headquarters in Paris, OECD Chief Economist Laurence Boone told reporters it expects the world economy to rebound and grow by 5.6 percent in 2021 and by 4 percent in 2022. In December, the group predicted global growth of 4.2 this year and 3.7 next year.
Boone cautioned there were risks to the upgraded prediction, notably the pace of vaccination programs. She said the faster nations can vaccinate, the quicker they can open and return to normal economic activity. She said it was important nations speed the pace of vaccinations to keep COVID-19 variants from causing new surges.
While the vaccine rollout would give a shot in the arm to the global economy, Boone said the $1.9 trillion stimulus package that is to be voted on by the U.S. House of Representatives was a big factor in the upgraded interim forecast. She said, “This will not only boost the U.S. economy, but it will fuel global growth through increased demand in the United States and from the U.S. to the rest of the world."
She said the U.S. spending proposal has the potential to add a full percentage point to the organization’s global forecast.
The OECD forecasts the U.S. economy will grow 6.5 percent this year and 4 percent next year, a significant bump from its December forecasts of 3.2 percent this year and 3.5 percent in 2022.
The OECD chief economist said Europe needs to speed up its overall vaccination programs before adding significant economic stimulus. “More stimulus without vaccinations would not be as effective because consumers would still not go out, shopping, travelling, dining, doing normal things. It's the combination of health and fiscal policy that matters."
