The economic priority… is the vaccine. The OECD on Wednesday urged states to step up the pace in the distribution of doses in order to stem the pandemic, which is progressing with the emergence of the Omicron variant, and the risk of an economic slowdown which is emerging.
“The priority remains to ensure that vaccines are produced and distributed as quickly as possible across the world, including booster doses,” urged the Organization for Economic Co-operation and Development, in the conclusions of its outlook intermediaries. “The recovery will remain precarious everywhere as long as this objective is not reached”, she added.
Although they do not take into account the latest developments around the Omicron variant, a new strain that has appeared in recent days and whose severity on health is still uncertain, the OECD’s global growth forecasts have been revised down slightly. 0.1 point to 5.6%, compared to the previous forecast for September. The activity next year would however be unchanged at 4.5%.
Omicron could cost more than 2 growth points
According to analysts at Oxford Economics, this new variant could cost between 0.25 percentage point in global growth next year, if it turns out to be relatively harmless, and more than 2 points, if a large part of the world’s population had to be confined again.
In the wake of the economic recovery this year, “striking imbalances have appeared”, underlines the international organization based in Paris, between developed countries on the one hand and emerging and developing countries on the other. These differences reflect, according to the institution, inequalities in health systems, public policies, worker shortages in certain sectors, and inflation “more sustainable than expected”.
Good prospects for France
For the euro zone, the OECD forecasts a slight decline in its 2021 growth forecast to 5.2%. On the other hand, it expects an improvement for France with a GDP up 6.8% this year (+ 0.5 point) and 4.2% next year (+ 0.2), and for Italy respectively up 6.3% (+ 0.4 point) and 4.6% (+ 0.5). The good dynamic of these two states is also linked to the fact that they particularly fell at the height of the pandemic.
Germany, for its part, is suffering from “shortages of key materials” for its industry and sees its forecast fall by 0.5 point next year to 4.1% but stabilize at 2.9% this year. The United Kingdom shows a slight rebound from previous forecasts, to 6.9% but a decline for 2022 to 4.7%. Investment remains subject to uncertainties, says the OECD, as Brexit-related tariff hikes weigh on imports and exports.
As for the United States, after significantly lowering the US outlook in September, the OECD has again lowered its expectations, this time to 5.6% this year and 3.7% next year. “The current withdrawal of budget support is now having a negative impact,” she explains, noting, however, that the level of savings remains high in the country.
Towards an imminent decline in inflation?
On inflation, another major fear of the moment, the OECD forecasts that price indices should peak by the end of the first quarter of next year in most advanced and emerging countries, before gradually falling. The institution also expects that part of the supply difficulties should dissipate by the end of the year.
The OECD calls on central bankers to “make it clear to what extent inflation figures above their targets will be tolerated” as part of their interest rate policy. For now, the two largest central banks in the world, the European and the American, are in no hurry to raise their rates.