In its semi-annual Economic Outlook, its comprehensive assessment of the state of the world economy, the Organization for Economic Co-operation and Development (OECD) has significantly improved its projections for economic growth in the UK this year and next. , from 5.1% to 7.2%. this year and 4.7% to 5.5% next year.
The upgrades, which have been reflected in many major economies, were the product of the dispersion of vaccines across much of the developed world, the Paris-based institution said.
But chief economist Laurence Boone warned that there are big gaps between the rich world and the poor world.
“The global economy is currently navigating recovery, with a lot of friction,” she said.
“The risk that sufficient post-pandemic growth will not be achieved or widely shared is high. Much will depend on the adoption of flexible and sustainable policy frameworks and the quality of international cooperation. “
However, the OECD has also calculated the likely change in its long-term growth forecasts for different economies, comparing its latest projections for the level of national income in 2025 with its pre-pandemic projection.
Such a comparison gives an idea of the long-term economic impact of recent events – known to economists as “scars”.
Although he found that the United States appeared likely to have an even greater national income than it previously thought – in other words being boosted rather than scarred by the pandemic period – most others countries have not been so fortunate.
And he said that with economic output averaging 0.5% lower each year over the next four years, the UK would face the biggest scars of any G7 economy.
The G7 includes the United States, Japan, Germany, United Kingdom, France, Italy and Canada.
The OECD Economic Outlook indicated that this was more of a consequence of Britain’s departure from the EU than of COVID itself: “The UK could experience the biggest reduction among G7 countries (a decrease of 0.5 percentage point per year), partly reflecting side effects of the offer from 2021 after Brexit. ”