OECD reduces global growth forecast for 2021 and warns of inflation

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The main risk for global economic prospects is that the current jump in inflation will prove to be longer and stronger than currently expected, says the OECD (Organization for Economic Cooperation and Development) on Wednesday ).

According to the organization, global growth is expected to reach 5.6% this year — which represents 0.1 point less compared to the September estimate — before moderating to 4.5% in 2022 and 3.2% in 2023.

This has changed little from the previous estimate of 5.7% for 2021, while the forecast for 2022 was unchanged. It was the first time that the OECD released projections for 2023.

The organization highlights the existence of very different economic realities between regions and says that recovery will continue to be precarious as long as vaccines are not distributed throughout the world.

He says that, with the global economy recovering strongly, companies are finding it difficult to meet the return of demand from post-pandemic customers, causing inflation to rise around the world amid bottlenecks in global supply chains.

Like most authorities, for the OECD, the leap should be transitory and decrease as demand and production return to normal.

“The main risk, however, is that inflation will continue to surprise upwards, forcing major central banks to tighten monetary policy earlier and with more force than projected.”

For the euro zone, the OECD calculated a slight drop in the growth forecast for 2021, at 5.2%, and, for the United States, the organization is revising its projections again, with a growth of 5.6% for this period. year and 3.7% for 2022.

For Brazil, the OECD reduced its growth forecast by 0.2 point for 2021 and now projects a 5% increase. The outlook is grim for 2022, with a projected expansion of 1.4%, ie, 0.9 point less than in the previous forecast.

“Important imbalances have emerged,” the Paris-based organization said.

For the OECD, these gaps are a reflection of inequality in health systems, in public policies, the difficulties of workers in some sectors and a rise in prices that persists for longer than had been projected.

The report does not have estimates on the emergence of the omicron variant, detected a few days ago, but the chief economist of the OECD, French Laurence Boone, said it “may pose a threat to the recovery” of the world economy.

“We are concerned that this new variant, omicron, adds uncertainty to the existing climate, which could pose a threat to recovery,” Boone said.

(With Reuters)

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