2024-02-12 11:30:28
The impact of school closures on children’s education during the COVID-19 pandemic may have set back the chances of increased growth by 40 years, according to the Organization for Economic Co-operation and Development (OECD). global economy.
This grim prediction was put forward by the OECD in its February 2024 interim economic outlook report: “Strengthening the foundations of growth“.
The interim report examines the global economic outlook and inflation forecasts for 2024, as well as current geopolitical risks such as trade disruptions due to the Red Sea conflict.
Impact of isolation on children’s education could slow growth
The report reveals an unprecedented drop in math and reading test scores among 15-year-olds between 2018 and 2022years of the pandemic, citing the OECD’s global PISA (Performance for International Student Assessment) report for 2023.
According to the OECD, this drop in results could have negative impacts on global productivity, knowledge diffusion and innovation for 30 to 40 yearsdue to the impact of falling results in secondary education and, ultimately, on higher education and employment opportunities.
According to the report, these results can be mainly attributed to many schools’ implementation of online learning during the pandemic. Children from more economically disadvantaged backgrounds would not have benefited from the benefits of online learning like other studentsdue to a lack of resources.
These disadvantages range from lack of access to the internet or computers, lack of study space, and even lack of support from teachers and peers, among others. School closures having lasted for years in some countries, a number of students also saw an impact on their mental healthwhich also carried over into their academic lives.
According to British Conservative MP Duncan Smith, quoted by This Is Money: “Many of us knew what was going to happen. Children being excluded from school is a disaster“.
Education reforms are the way forward
However, the test results also highlighted some significant flaws in several education systems that existed well before the pandemicand clearly show the need for change.
In particular, it is necessary to raise the qualification level of teachers and improve the quality of teaching. Disadvantaged schools and children need more support in the form of more effective and better resources, the report says.
Additionally, for older and returning students, as well as current students, there is a need to provide more choices in lifelong learning, skills-based courses and professional training, which should ideally be adapted to current market requirements.
Inflation expected to fall further over the next two years
According to the OECD, the majority of G20 countries should return to inflation close to or in line with objectives by the end of next year. For 2024, overall inflation in G20 countries is expected to be around 6.6%with underlying inflation averaging 2.5%.
In 2025, headline inflation in the G20 economies is expected to be around 3.8%, with core inflation reduced to 2.1%.
However, central banks and economic institutes should continue to take a cautious approach and monitor data continuously. The Bank of England opted to hold interest rates at 5.25% at its February meeting, to be absolutely sure that inflation factors are under control before taking monetary easing measures. .
The report highlights: “Monetary policy must remain prudent to ensure that underlying inflationary pressures are sustainably contained. Nominal policy rates may be lowered if inflation continues to decline, which is expected to happen in the United States and the euro area by the second and third quarters of 2024 respectively, but the stance of monetary policy expected to remain restrictive for some time“.
Red Sea disruptions worsen shipping delays, increase costs
The OECD estimates that in 2022, approximately 15% of global maritime trade volumes passed through the Red Sea. With Houthi attacks in the Red Sea showing no signs of abating, the shipping costs have increased rapidly for a number of companies.
This is mainly due to the fact that several companies such as Hapag Lloyd, Maersk and Mediterranean Shipping Company (MSC) have announced that they will halt transits through the Red Sea due to the increasing danger of attacks on commercial ships.
Many companies now have to circumnavigate the African continent, via the Cape of Good Hope, and are seeing the duration of their journeys increase by 30 to 50%. This especially has repercussions on the routes and schedules of trade between Asia and Europe.
This has raised concerns about global shipping capacity. Several companies have placed additional orders for container ships as they emerge from the pandemic, and it is hoped that this will help close the supply gap and reduce costs.
ADVERTISEMENTTransportation costs can have a significant impact on global inflation. Several European retailers, such as Tesco, Primark, Next and Marks and Spencer, have warned that the Red Sea crisis could lead to price hikes, as well as the unavailability of some products.
The OECD estimates that if transport costs continue to increase, annual import price inflation could increase by around 5%. Consumer price inflation could then increase by around 0.4% within a year.
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