OECD warns of ‘unequal’ global Covid recovery as it lowers UK growth forecasts – and upgrades inflation estimates
The OECD strongly warned that the Covid recovery will be “uneven” today as it lowered UK growth forecasts and upgraded inflation estimates.
The economic body said there are likely “strikingly different” fortunes for countries in the next phase of the pandemic.
It has revised the outlook for a number of major states, including the US, Canada and Germany, downward from previous May figures. But France and Italy saw their numbers rise.
Britain had 0.5 percentage point cropped expectations for real GDP growth this year, although it will still be the fastest-growing G7 member after Covid’s biggest blow.
The OECD has also reversed the forecast for 2022 by 0.3 percentage point to 5.2 percent.
And in a move that could alarm ministers, it nearly doubled estimates for inflation to 2.3 percent this year and 3.1 percent next year – though it suggested the effects are likely to be temporary.
The OECD said there will likely be ‘strikingly different’ fortunes for countries in the next phase of the pandemic
The OECD has nearly doubled estimates for inflation in the UK to 2.3 percent this year – though suggested the effects are likely to be temporary
In its interim economic outlook, the OECD said the recovery was driven by stimulus measures, the rollout of vaccines and easing lockdowns.
But the Paris-based organization expressed concern 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 pre-pandemic levels and is expected to grow by 5.7 percent this year, down 0.1 percentage points from the previous forecast in May.
But the outlook for 2022 has improved slightly, with growth expected to be 4.5 percent, up 0.1 point.
“Production and employment gaps persist in many countries, especially in emerging markets and emerging economies where vaccination rates are low,” the report said.
It warned that while the impact of the Delta variant had been “relatively mild” in countries with high vaccination rates so far, it had gained momentum elsewhere, putting pressure on global supply chains and costs.
“Significant uncertainty remains,” the report said, warning that slow progress in vaccination campaigns and the spread of virus mutations would lead to a weaker recovery and more job losses.
“What worries us even more is that many emerging markets, with the exception of China, are still lagging far behind in vaccination programs,” Boone said.
‘The situation is even worse in low-income countries.’
The OECD lowered its growth outlook for the United States from 6.9 to 6.0 percent this year. That’s well below the US Congressional Budget Office’s forecast of 6.7 percent.
The estimate for the eurozone was increased by one point to 5.3 percent, although the outlook has varied widely within the bloc.
The growth prospects of Argentina, Brazil, Mexico, South Africa, South Korea and Turkey have also improved, while those of Australia, Japan and Russia have declined.
The forecast for China, the world’s second largest economy and an engine of global growth, remained unchanged at 8.5 percent.
The UK had trimmed 0.5 percentage points from expectations for real GDP growth this year, although it will still be the fastest growing G7 member after taking the biggest blow from Covid