Immunization as a key to the global outlook: OECD
The global economic recovery faces “precarious and uncertain” prospects until COVID-19 vaccinations are rolled out worldwide, the Organization for Economic Co-operation and Development warns.
In its interim economic outlook, the OECD says governments need to get people vaccinated as quickly as possible to save lives, preserve incomes and bring the virus under control.
“Failure to ensure global removal of the virus increases the risk that new, more transmissible variants will continue to emerge,” he said in the report on Tuesday.
The Paris-based institution says the economic impact of the Delta variant has so far been relatively moderate in countries with high vaccination rates.
But elsewhere, it has slowed momentum and increased pressures on global supply chains and costs.
“Mobility has weakened in some Asia-Pacific countries, including Australia, where stricter containment measures have been reintroduced,” he said.
He confirms that he now expects the Australian economy to grow 4% in 2022 instead of the 5.1% he predicted in May.
For 2023, it is growing by 3.3%, down slightly from the 3.4% previously forecast.
The OECD released a study on Australia last week, saying the economy is expected to contract in the September quarter due to COVID-19 restrictions that have stranded its two most populous states.
For the global economy, the OECD forecasts growth of 5.7% for 2021 and 4.5% in 2022, little change from its previous forecast.
However, according to the OECD, “significant uncertainty remains”.
“Faster progress in vaccine deployment or a sharper reduction in household savings would increase demand and reduce unemployment, but could also increase inflationary pressures in the short term,” he said.
Conversely, the slow deployment of vaccines and the continued spread of new viral mutations would lead to a weaker recovery and greater job losses.
The OECD calls on central banks to maintain an accommodative monetary policy, while providing clear guidance on future movements and the extent to which it would tolerate exceeding its inflation targets.
He also urges governments to remain flexible and maintain policies dependent on the state of the economy.
“A premature and abrupt withdrawal of political support should be avoided while the short-term outlook is still uncertain,” he said.