The Strategist

OECD: GDP growth in developed countries slows down again

05/21/2021 - 04:36

Average GDP growth in the most economically developed countries slowed to 0.3% in the first quarter of 2021 from 1% in the fourth quarter of 2020, preliminary data from the Organisation for Economic Cooperation and Development (OECD) show. In annual terms, GDP growth remained negative at minus 0.8% after minus 2.9% in the fourth quarter, minus 3.8% in the third, minus 11.6% in the second and minus 0.9% in the first quarter of 2020.

The slowdown is attributable to the strengthening of "anti-covid" restrictions in a number of OECD countries. In Germany, the UK and Japan, GDP fell sharply by 1.7%, 1.5% and 1.3% quarter-on-quarter respectively. In Italy, on the contrary, the rate of decline slowed down - from 1.8% to 0.4%, in France the dynamics of GDP change became positive - plus 0.4% against 1.4% in October-December. In the euro area as a whole the decline was 0.6% compared to 0.4% quarter-on-quarter. In Canada and the USA, growth was 1.6% each (2.3% and 1.1% in the fourth quarter).

Compared to the end of 2019, GDP trends in developed countries remain negative at minus 2.6%. The most pronounced downturn remains in the euro area, with a cumulative GDP decline of 5.5%. The economies of Great Britain suffered the greatest losses - minus 8.7% and Italy - minus 6.9%. In France and Germany 4.9% and 4.4% of decline were not compensated. By comparison, in the USA it was only 0.9%. Furthermore, the US Federal Reserve expects growth to accelerate, the GDP forecast for 2021 was improved from 4.2% to 6.5%. A stimulus package and the preparation of two new plans contributed to this. However, US inflation growth unexpectedly accelerated to 4.2% year-on-year in April (0.8% month-on-month) and several members of the Fed's Open Market Committee are ready to consider cutting stimulus programmes, according to the regulator's April meeting transcript.

At the same time, global trade volume, according to UNCTAD, grew by 4% in the first quarter of 2021 (up 10% year-on-year), up 3% from end-2019 levels. The value of global trade is projected to reach $6.6 trillion in the second quarter of 2021, equivalent to a 31% year-on-year increase. The main drivers of trade recovery will be the economies of China and the US, UNCTAD expects.