The Strategist

OECD: COVID-19 robs the global economy of a year of growth

09/23/2021 - 06:37

Global GDP may grow by 5.7% this year and by 4.5% next year, according to an updated forecast by the OECD. Compared to previous estimates of the organisation, the global growth forecast has been reduced by 0.1 percentage point for 2021 and increased by the same amount for the next year. Overall, says the OECD, global GDP has already exceeded the pre-pandemic level. At the same time, it is 3.5% lower than expected at the start of 2020, equivalent to a whole 'missed' year of global economic growth.

The OECD has improved its forecast for the euro zone by 1p to 5.3% for this year and by 0.2p to 4.6% for next year. Germany, according to these estimates, will grow 2.9% in 2021, France 6.3%, Italy 5.9% and Spain 6.8%. For the UK, the forecast has been reduced by 0.5 p. p. to 6.7%. For the USA - immediately by 0.9 p. p., to 6%.

Among developing countries, the forecast for Mexico was significantly improved - by 1.3 p. p. to 6.3%; by 2.7 p. p. to 8.4% for Turkey; by 1.5 p. p. for Brazil and Argentina, to 5.2% and 7.6% respectively. For China, the forecast remained unchanged at 8.5% growth in 2021. Downward adjustments were made to Saudi Arabia, Indonesia as well as Russia. 

The inflation rate in the G20 countries, according to the OECD, will rise to 3.7% this year from 2.7% last year, and to 3.9% in 2022. The highest figure will be in Turkey - 17.8% at the end of this year and in Argentina - 47%. Inflation in Russia is expected to be 6.1% and slow to 5.5% next year. Overall, price growth rates were up on the previous forecast for all major countries - except Japan, Indonesia and China. So far, this spike in inflation has been attributed to temporary factors, including supply chain problems. Price rises can only become more sustainable if there are marked increases in wages, but so far only a few sectors (mainly tourism and hotels) have seen such increases, the OECD said.