Hopes and fears of the global recovery
The recovery from the shock of the pandemic is here. It is driven, above all, by the arrival of vaccines, but also by an improvement in our ability to combine economic activity with social distancing, and huge fiscal and monetary support — especially from the US. Yet it is vital not to forget the perils we still face and the lessons we must still learn. Nothing can teach the reality of global interdependence better than a pandemic. But is this what we learnt? In our fear, we have turned inwards more than outwards.
Nevertheless, the news on the recovery is good. The OECD’s recently issued interim Economic Outlook shows a clear improvement in growth prospects for 2021 and 2022. Global output is forecast to be 2.5 per cent higher in the last quarter of 2022 than was expected as recently as last December. The single most important reason for this, after the miracle of the vaccines, is the US’s $1.9tn fiscal support package. This is forecast to raise US gross domestic product by 3.8 percentage points in its first full year. Its effects are also forecast to spill over to the rest of the world, raising eurozone GDP by 0.5 percentage points to take one example.
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