The global economic outlook has brightened as Covid-19 vaccine rollouts speed up in some countries and the United States launches a vast new stimulus package, prompting the OECD to raise its forecasts.
A soldier prepares to vaccinate a person in north Miami, Florida, earlier this month. Photo: 2021 Getty Images
The world economy is set to rebound this year with 5.6 percent growth and expand 4 percent next year, the Organisation for Economic Cooperation and Development said in its interim economic outlook.
That marked a sharp increase from its December report, it forecast global growth of 4.2 percent this year and 3.7 percent next year.
New Zealand was forecast to grow 2.7 percent this year and 2.6 percent in 2022.
But significant risks loom over the improved outlook, notably in the form of how fast authorities get vaccine shots to people, how soon restrictions are lifted and whether new variants of the coronavirus are kept in check.
"Not vaccinating fast enough risks undermining the fiscal stimulus that has been put in place," OECD chief economist Laurence Boone said.
Global gross domestic product was seen returning to pre-pandemic levels by the middle of this year, albeit with large divergences between countries.
"The pace of vaccinations is not fast enough to consolidate the recovery. We need to go much faster and we need to do much better," Boone said.
The vaccine rollout would give a shot in the arm to the global economy, while the United States' planned $1.9 trillion stimulus package would flow through other countries, adding more than a percentage point to global growth.
The US economy would grow 6.5 percent this year and 4 percent next year, a significant lift on OECD's December forecasts.
With public money flooding into the world's biggest economy, the package could lead to the creation of up to 3 million US jobs by the end of the year but could also increase inflation by 0.75 percentage points per year on average in the first two years.
People wait for help with their unemployment claims in Frankfort, Kentucky. A new stimulus package may create up to 3 million new jobs in the US, the OECD says. (file pic) Photo: 2020 Getty Images
Meanwhile, the stimulus would be a boon for the US' major trading partners, boosting growth by 0.5-1 percentage points in Canada and Mexico, and between 0.25-0.5 in Europe and China, the OECD said.
- Reuters
