The American economy is set to accelerate nearly twice as fast this year as expected as President Biden’s imminent $ 1.9 trillion stimulus package, coupled with a swift introduction of vaccines, sparks a strong rebound from the pandemic the Organization for Economic Cooperation and Development announced on Tuesday.
However, countries stumbling at the pace of their vaccination campaigns, especially those in Europe, are at risk of falling behind in global recovery as governments are not forced to push back the spread of the virus in order to return to normal lives, the said Organization.
In its half-year outlook, the organization said the United States would expand 6.5 percent this year, a sharp increase from the 3.2 percent forecast in December. The upswing in the world’s largest economy will generate enough momentum to increase global production by 5.6 percent from 3.4 percent in 2020.
China, which contained the virus earlier than other countries, remains a big global winner with forecast growth of 7.8 percent.
Although a global recovery is in sight, government spending to boost their economies will have limited impact unless authorities accelerate national vaccine rollouts and ease virus containment measures, the report added. When vaccination programs aren’t fast enough to reduce infection rates, or when new varieties become more prevalent and vaccine changes are required, consumer spending and business confidence will be hurt.
“Vaccine-free stimuli are not as effective because consumers don’t do normal things,” said Laurence Boone, chief economist at the OECD, in an online press conference. “It’s the combination of health and financial policy that matters.”
This is particularly true in Europe, and particularly Germany and France, where a mix of poor public health management and slow vaccination programs is weighing on the recovery despite billions in government support. Such spending “will not be fully effective until the economy reopens,” said Ms. Boone.
The euro area economy is expected to grow 3.9 percent this year, slightly more than forecast in December, but more slowly than the US. In the UK, which accelerated a national vaccination rollout late last year, economic growth is expected to be 5.1 percent, compared with a forecast of 4.2 percent.
India’s economy is expected to grow 12.6 percent after falling 7.4 percent in 2020, the organization added.