OECD Economic Review for 2021

On May 31, 2021, the OECD Economic Survey for 2021 is published, which presents a global assessment of the macroeconomic situation and forecasts for each individual country (OECD member countries and individual partner countries). This OECD economic survey is published twice a year, based on an analysis of the main global economic trends and prospects for the next two years. 

The OECD notes a more favorable global economic outlook, but forecasts that the recovery process in the countries will be uneven.

After an unprecedented fall and subsequent recovery in 2020, real gross domestic product (GDP) growth in OECD countries slowed to 0.3% in the first quarter of 2021, compared with 1.0% in the previous quarter, according to preliminary estimates. This slowdown is partly due to the strengthening of measures taken to contain the spread of COVID-19 in some countries in early 2021.

The outlook for the global economy has improved, but the recovery is likely to remain uneven and, crucially, will depend on the effectiveness of public health measures and government support.

In many advanced economies, more and more people are being vaccinated, government measures are stimulating demand, and businesses are better adapting to restrictions to stop the spread of the virus. But in many emerging economies, where access to vaccines and government support is limited, the recovery will be more modest.

The OECD has revised up its growth forecasts for the world's major economies since the last full economic forecast was released in December 2020. For example, the OECD forecasts global GDP growth of 5.8% this year (compared to the forecast of 4.2% in December 2020), which is facilitated by government measures to counter the spread of the coronovirus. The global economy is now back to pre-pandemic activity levels, but by the end of 2022, real world income will still be about $ 3 trillion less than it would have been without the crisis.

The differences between countries are based on public health strategies, the speed of vaccine implementation, financial and monetary support, and the relative importance of hard-hit sectors such as tourism. While Korea and the US have already returned to pre-pandemic income levels, it is expected that most of Europe will need an additional year to return to pre-pandemic levels. In Mexico and South Africa, it may take another three to five years.

OECD Forecast Real GDP Growth

% change compared to the same period last year

↑ upward revision, by 0.3 p.p. and more

- unchanged or less than 0.3 p.p.

↑ downward revision, by 0.3 p.p. and more

The progress of the vaccination process in developed countries and massive government policies to support the public and business can increase the prospects for a global economic recovery in 2021 and 2022. At the same time, many countries will still remain below the level expected before the pandemic, even at the end
of 2022.

Conclusion

The forecasts are characterized by considerable uncertainty, although the risks have become more balanced between potential positive and negative impacts. In countries where vaccination is not widespread, the risk of new outbreaks remains very high, with the possible emergence of new vaccine-resistant variants of the virus. This could trigger further measures to contain and slow down the economic recovery.

On the positive side, the high levels of household savings accumulated during the crisis can be released as the economy resumes, leading to increased consumption and growth to higher-than-expected levels, especially in advanced economies.

Read the full review here