OECD September 2021 report: Keeping The Recovery On Track

The OECD is the Organisation for Economic Co-operation and Development, an international organisation that works with governments, policy makers and people to gather evidence on international standards that help inform better policy decisions.  

The OECD have published an Economic Outlook, Interim Report: Keeping the Recovery on Track. The report looks at how economic growth has recovered from the COVID-19 pandemic so far in 2021. Broadly, economic growth has picked up in 2021 helped by targeted policies and the roll out of vaccination programmes, which has enabled many economies return to normal activities.  

Global GDP has now surpassed its pre-pandemic level 

  • By the end of 2021, global GDP is expected to grow by 5.7% 
  • OECD projections suggest that by 2022, global GDP will grow by a further 4.5% 
  • Advanced economies are expected to rebound quicker with better growth prospects  
  • Higher commodity prices and global shipping costs are adding to annual G20 inflation 
  • Inflation continues to rise in the US, Canada and the UK but remains relatively lower in other advanced economies.  

Sizeable uncertainty remains 

  • The balance between inflationary pressures and policy measures already deployed to reduce unemployment whilst increasing demand is one that will need to be carefully struck as recovery continues. 
  • Slower progress in vaccine rollout and the continued spread of new virus mutations would result in a weaker recovery and larger job losses. 
  • Macroeconomic support remains necessary whilst the near-term outlook is still uncertain. 

The mix of policies required depended upon on economic developments in each country 

  • Monetary policy should be accommodative but eventually move towards normal. 
  • Fiscal policies should remain flexible and adaptive to the state of the economy.  
  • Stronger public investment and enhanced structural reforms are needed to boost resilience. 

The recovery remains uneven  

  • Strikingly different outcomes across countries, sectors, and demographic groups in terms of output and employment. 
  • In economies where containment measures were eased in Q2 2021, growth expanded helped by strong consumer spending.  
  • Renewed containment measures in Asia-Pacific regions are a near-term concern as the impact of the Delta-variant remains a risk.  

The United Kingdom Outlook 

  • The interim Economic Outlook for the UK is 6.7% projected growth in 2021 on 2020 
  • This is a slight decline from the May Economic Outlook, a fall of -0.5 percentage points. 
  • Growth in the UK is expected to expand by a further 5.2% in 2022, also a revised down figure on previous outlooks.  

The full Economic Outlook report, including charts and tables is available through the OEC Library, and sets out some of the key watch points for the recovery for the remainder of 2021 and into 2022.