The OECD has just published its growth forecasts for 2021. The institution has sharply revised upwards its estimate for global GDP, to 5.6% against 4.2% initially forecast. “We must get ready to war against the virus”, declared on franceinfo Tuesday, February 9 Laurence Boone, chief economist of the OECD.
franceinfo: What enabled the OECD to revise upwards its growth forecasts for 2021?
We have revised our forecasts upwards quite significantly for two reasons: the first is that there are many countries which are able to better manage the pandemic and which have started to vaccinate, we are also learning to live with it and to continue working; and the second reason is the huge US stimulus of 1.9 trillion dollars on top of the 900 billion that had already been agreed in December.
The US stimulus package is not solely responsible for the recovery …
If everything is closed it is of little use. It is not normal economic policy to shut down operations. It is a reaction to a health shock caused by the virus. So the primary goal for the economy to pick up is to reopen. And to reopen, it is necessary to vaccinate. The United States is vaccinating fast and is reopening accordingly and on top of that they are doing huge support to their households and businesses. So we think that this support will increase US growth to 6.5%, compared to 3.2%. It will benefit the rest of the world since they are going to consume.
Can the stimulus package initiated by Joe Biden cause overheating with consequent rise in inflation and interest rates?
We see rates increase in the United States but this is normal because the financial markets are integrating the fact that there will be more growth in the United States, that there will perhaps be more. inflation because that will also help prices to become more vigorous again. So it’s normal for rates to go up in the United States. In Europe this should not be the case since we do not have the same impetus as in the United States.
And France?
We are very careful, we are in a period of incredible uncertainty. For France, as for all of Europe, our forecasts are based on the fact that vaccines are being deployed on an accelerated basis, particularly from the second quarter, which will help to reopen the economy. And with all the support that has been given – Europe has been great, whether it is the European Central Bank, the European Union’s resilience fund – … with all this, we hypothesize that it does not There is no reason that it does not start again strongly if we reopen the economy quickly.
