The Organisation for Economic Cooperation and Development downgraded global growth outlook for next year and called for determined policy action to achieve sustainable and inclusive growth.
The world economy is projected to shrink 4.2 percent this year before rebounding 4.2 percent in 2021, the Paris-based agency said in its economic outlook, released Tuesday.
The agency upgraded its 2020 outlook from -4.5 percent but lowered the projection for next year from 5 percent. The growth is seen at 3.7 percent in 2022.
According to latest estimate, global GDP is set to reach pre-pandemic levels by the end of 2021.
The prospect of a number of Covid-19 vaccines becoming widely available next year has raised hopes that recovery is in sight. But the path remains long and difficult, said OECD.
The recovery would be stronger if vaccines are rolled out fast, boosting confidence and lowering uncertainty, the agency said. At the same time, delays to vaccination deployment, difficulties controlling new virus outbreaks and failure to learn lessons from the first wave would weaken the outlook.
“Building back better requires leadership and action to build on the promises of vaccines, and to relaunch multilateral negotiations on trade, climate and digital standards to pave the way for a more sustainable growth and a society where opportunities are available for all,” OECD Secretary-General Angel Gurr?a said.
The OECD observed that achieving a stronger, sustainable and inclusive global economy will require determined policy action now.
Activity in China is projected to return to its past trajectory, with growth of 8 percent in 2021 and 4.9 percent in 2022.
After shrinking 3.7 percent this year, the US economy is forecast to expand 3.2 percent in 2021 and 3.5 percent in 2022.
The OECD said growth is expected to pick up through 2021, reflecting an assumed additional fiscal package that will particularly support household incomes and consumption.
After experiencing one of the world’s tightest lockdowns and recording the deepest GDP contraction among G20 economies in the second quarter of 2020, the Indian economy is recovering, the agency noted.
India is forecast to contract sharply by 9.9 percent in 2020 before rebounding 7.9 percent next year and 4.8 percent in 2022. Nonetheless, the GDP loss will be substantial.
Eurozone will grow about 3.25 percent in 2022 and 3.6 percent in 2021 after falling 7.5 percent in 2020. This will bring output back to its pre-pandemic levels only at the end of 2022, OECD said.
In order to avoid a premature tightening that could derail the recovery, national fiscal policies should also remain supportive over the coming two years.
Driven by a rebound of consumption, the UK economy will grow 4.2 percent in 2021 and 4.1 percent in 2022, the agency said. The GDP fall for 2020 was estimated at 11.2 percent.
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