The Organization for Economic Cooperation and Development (OECD) released its latest economic outlook, which contains many interesting details. It is worth mentioning that, OECD expects the global economy to gain strength over the coming two years. The real gross domestic product (GDP) growth is projected to reach pre-pandemic levels by the end of 2021.
According to the latest economic outlook, the organization expects the global economy to contract 4.2% this year. Importantly, that reflects an upward revision from an estimate made in September that pointed to a 4.5% fall in real GDP.
Based on the information provided by OECD, worldwide economic growth would average 4% over the next two years. Interestingly, it expects real GDP growth to reach 4.2% in 2021, which is less optimistic than the previous estimate. Also, the OECD expects worldwide economic growth of 3.7% in 2022.
It is no secret that considerable uncertainty remains and the OECD urged policymakers around the world to maintain targeted support to vulnerable children, people and businesses to reduce the risks of the coronavirus crisis affecting the situation in the long run.
Importantly, the organization expressed cautious optimism about the worldwide economy gaining momentum through to 2022. The OECD cited scientific progress, pharmaceutical advances, and adjustments in the behavior of people and firms, among others, among other factors. Notably, the factors mentioned earlier most likely helped to improve the situation.
Moreover, together with reduced uncertainty and huge fiscal relief provided throughout the year, the global economic rebound is anticipated to keep getting stronger as more activities re-open. Also, encouraging information regarding the coronavirus vaccine is important for the economy. Interestingly, there are hopes that the coronavirus vaccines will help to bring an end to the pandemic that is the cause of a lot of problems for the global economy.
The global economy and the path to recovery
Based on the information provided by OECD, the economic recovery would be uneven across countries. The organization expects China to account for over one-third of world economic growth in 2021. However, the contribution of Europe, as well as North America, will remain smaller than their weight in the world economy.
Importantly, China remains the only major economy expected to record economic growth in 2020.
Governments should work harder to minimize the damage caused by the coronavirus pandemic. Moreover, governments would need to use their policy instruments to help people who are struggling to cope with problems. Also, the countries with the biggest economies should join forces with developing countries to improve the situation.