OECD sees global economy turning the corner on coronavirus crisis

The outlook for the global economy is improving despite a second wave of coronavirus outbreaks in many countries as vaccines emerge and a Chinese-led recovery takes hold, the Organisation for Economic Cooperation and Development (OECD) said on Tuesday.

The global economy will grow by 4.2 percent next year and ease to 3.7 percent in 2022, after shrinking by 4.2 percent this year, the OECD said in its latest Economic Outlook report.

After a second wave of infections hit Europe and the United States, the Paris-based policy forum trimmed its forecasts from September, when it expected a global contraction of 4.5 percent before a 5-percent recovery in 2021. It did not have a 2022 forecast at the time.

"We're not out of the woods. We're still in the midst of a pandemic crisis, which means that policy still has a lot to do," said OECD chief economist Laurence Boone.

Overall global gross domestic product will return to pre-crisis levels by the end of 2021, led by a strong recovery in China, the OECD said.

But that masked wide variations among countries, with output in many economies expected to remain about 5 percent below pre-crisis levels in 2022.

China will be the only country covered by the OECD to see any growth at all this year, at 1.8 percent, unchanged from the last forecast in September. It will gain speed to 8 percent in 2021 - also unchanged – before easing to 4.9 percent in 2022.

The United States and Europe are expected to contribute less to the recovery than their weight in the global economy.

After contracting by 3.7 percent this year, the U.S. economy will grow by 3.2 percent in 2021 and 3.5 percent in 2022, assuming a new fiscal stimulus is agreed. In September, the OECD had forecast a contraction of 3.8 percent this year and a rebound of 4 percent next year.

The euro area economy will contract by 7.5 percent this year, with many economies finishing the year in a double-dip recession after re-imposing lockdowns. Its economy will see growth return in 2021 at 3.6 percent and 3.3 percent in 2022.

Though hard hit, the forecasts were an improvement from September, which had foreseen a contraction of 7.9 percent this year and a 5.1-percent rebound in 2021.