WASHINGTON–The American economy will accelerate nearly twice as fast as expected this year as result of the just-passed $1.9-trillion stimulus plan combined with the rapid vaccine rollout, which will lead to a powerful recovery from the pandemic, according to a new analysis released by the Organization for Economic Cooperation and Development (OECD).
But other countries, especially those that have stumbled with their vaccination campaigns, including in Europe, risk falling behind in the global economic recovery, the organization added.
In its half-year outlook, the organization projected the United States would expand 6.5% this year, up sharply from 3.2% forecast in December. The surge in the world’s largest economy will generate enough momentum to help lift global output 5.6%, from a 3.4% contraction in 2020.
China, which contained the virus earlier than other countries, remains a big global winner, with growth of 7.8% forecast.
The Caveat
The report notes that although a global recovery is in sight, spending by governments intended to jump-start their economies will have limited impact unless authorities accelerate national vaccine rollouts and relax virus containment measures. If vaccination programs aren’t fast enough to cut infection rates, or if new variants become more widespread and require changes to vaccines, consumer spending and business confidence would be hit, the report adds.
“Stimulus without vaccinations won’t be as effective because consumers won’t go out doing normal things,” Laurence Boone, the O.E.C.D.’s chief economist, said in an online news briefing reported by the New York Times. “It’s the combination of health and fiscal policy that matters.”
The Risk in Europe
According to Boone, that is especially the case for Europe, and Germany and France in particular, where a mix of poor public health management and slow vaccination programs are weighing on a recovery, despite billions in government support. Such spending “won’t be fully effective as long as the economy doesn’t reopen,” Boone said.
The euro area economy is expected to grow 3.9% this year, slightly more than forecast in December but slower than the United States. In Britain, which sped a national vaccination rollout late last year, the economy is expected to grow 5.1%, up from a 4.2% forecast.