A Resurgent World Economy Is Seen Leaving Many Behind

A strengthening world recovery from the Covid-19 pandemic risks leaving behind many regions, fueling inequalities across and within borders, the Organization for Economic Cooperation and Development said Monday. As the Paris-based group revised up its 2021 global growth forecast to 5.8% from 5.6%, it warned of gaping differences that mean living standards for some people won’t return to pre-crisis levels for an extended period.

In countries including Argentina and Spain, more than three years will elapse between the onset of the pandemic and a recovery of per-capita economic output, according to the new projections. That compares to just 18 months in the U.S. and under a year in China. “It is with some relief that we can see the economic outlook brightening, but with some discomfort that it is doing so in a very uneven way,” OECD Chief Economist Laurence Boone said. “The risk that sufficient post-pandemic growth is not achieved or widely shared is elevated.”

The assessment sounds a note of caution as confidence surges in the world’s richest countries with the lifting of restrictions and the acceleration of vaccination campaigns. The OECD praised governments for exceptionally swift and effective policy support that is now fueling a rebound in trade, manufacturing and consumer spending. That will limit the scars the crisis leaves behind, the 38-member organization said.

For governments, the OECD prescribed a combination of flexible fiscal support targeted particularly at small firms, and an effort to restore confidence with credible plans to repair public finances in the longer term. It also said public money should be spent swiftly on investment for a digital and lower-carbon economy.

A Resurgent World Economy Is Seen Leaving Many Behind, Bloomberg, May 31