OECD lowers global, US economic growth forecasts

Paris: The OECD warned Tuesday of an “uneven” global economic recovery as it lowered its 2021 growth forecasts for the world and the United States while raising the outlook for Europe.

The world economy has bounced back this year on the back of stimulus measures, the rollout of effective Covid vaccines and the resumption of many economic activities, the Organisation for Economic Co-operation and Development (OECD) said.

But the Paris-based organisation voiced concerns about lower vaccination rates in poorer countries.

“The recovery remains very uneven, with strikingly different outcomes across countries,” the OECD said in its interim economic outlook.

Global gross domestic product has surpassed its pre-pandemic level following last year’s Covid-induced recession.

Global output is now expected to expand by 5.7 percent this year, down 0.1 percentage points from the organisation’s previous forecast in May.

But the outlook for 2022 has slightly improved, with 4.5 percent growth now expected, up by 0.1 points.

“Output and employment gaps remain in many countries, particularly in emerging-market and developing economies where vaccination rates are low,” the report said.

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The OECD lowered its growth outlook for the United States, from 6.9 to 6.0 percent this year. The US Congressional Budget Office has forecast 6.7 percent growth for the world’s top economy.

The Delta variant hit the US economy harder in the second quarter “but it is picking up again very strongly,” the OECD’s chief economist, Laurence Boone, said at a news conference.

The OECD’s eurozone forecast was raised by one point to 5.3 percent, though the outlook varied within the single-currency bloc, with higher growth now expected in France, Italy and Spain while Germany was not performing as well.

The growth prospects of Argentina, Brazil, Mexico, South Africa, South Korea and Turkey have also improved, while those of Australia, Britain, Japan and Russia were lowered.

The forecast for China, the world’s second biggest economy and a driver of global growth, remained unchanged at 8.5 percent.

The impact of the Delta variant of the coronavirus has “so far been relatively mild” in countries with high vaccination rates, but it has lowered the momentum elsewhere and added pressures to global supply chains and costs, the OECD said.

“Sizeable uncertainty remains,” the report said, warning that slow progress in vaccination drives and the spread of virus mutations would lead to a weaker recovery and larger job losses.

“What worries us even more is that many emerging markets with the exception of China are still far behind advanced ones for vaccination programme levels,” Boone said.

“The situation is even worse in low income countries.” Earlier this month, United Nations chief Antonio Guterres expressed disappointment that vaccine-manufacturing nations have been unable to ramp up production toward the goal of vaccinating some 70 percent of the world population by the first half of 2022.