New coronavirus vaccines will help the world's economy bounce back in 2021, but the gains will depend on how the vaccines are distributed, among other factors, the Organisation for Economic Co-operation and Development says.
In its new projection, the group says global GDP should rise by 4.2% next year, after falling 4.2% in 2020.
"The recovery would be stronger if vaccines are rolled out fast, boosting confidence and lowering uncertainty," the organization says in its newly released OECD Economic Outlook, December 2020.
But the pandemic's fallout could bring lasting changes to the world economy, according to the forecast. For instance, Asia will see the strongest growth, while Western nations that are still struggling to control the coronavirus will fare worse.
"China, which started recovering earlier, is projected to grow strongly, accounting for over one-third of world economic growth in 2021," OECD Chief Economist Laurence Boone said in the report.
"The contribution of Europe and North America to global growth will remain smaller than their weight in the global economy," Boone adds, describing an uneven recovery.
The forecast also predicts continued struggles for industries such as hospitality and transportation, posing a particular challenge for countries that rely on tourism.
Boone's editorial introducing the report is titled "Turning hope into reality" — reflecting both the optimism brought by promising new vaccines, and the uncertainty of how quickly conditions will improve. COVID-19 has killed nearly 1.5 million people worldwide, and more than 63 million cases have been reported, according to Johns Hopkins University.
"For the first time since the pandemic began, there is now hope for a brighter future," Boone said, citing advances in vaccines and treatments.
The economic forecast from the Paris-based organization of 37 highly developed, mostly Western nations, warns that the recovery could be limited if vaccines are delayed, if governments can't control new outbreaks or if they fail to "learn lessons from the first wave" of COVID-19 that ravaged economies worldwide.
In its section on the U.S., the OECD predicts the unemployment rate will gradually fall but will remain higher than before the pandemic struck.
"A general rollout of an effective vaccine in the latter half of 2021 will allow an easing of containment measures and strengthen confidence" in the U.S., the report states. But it adds that the U.S. economy urgently needs more help from the federal government.
"Massive monetary and fiscal responses have protected households and businesses," the report says. "However, in the absence of a new substantial fiscal stimulus program, a severe fiscal cliff would result in a rapid withdrawal of support to households, massive layoffs and a wave of bankruptcies (this is assumed to be avoided in the projection)."
A full economic recovery will require more than a massive vaccine effort, the OECD says, citing the need for strategic health policies and government financial support for people and businesses laid low by months of shutdowns and safety restrictions.
"Small businesses, which have been badly hit by the crisis, need grants, not more debt, in order to survive," the OECD says. "Grants can help them adapt, by exploiting digital technology for instance, and investing for the future."
Delays in vaccination deployment, problems controlling new virus outbreaks and governments that fail to learn lessons from the first wave would weaken the recovery outlook, the OECD says.
The group's report says governments should remain focused on four main policy areas to help minimize the pandemic's financial impact: supporting children who have been forced out of their schools, undermining their future prospects; helping small businesses; strengthening public health policies; and supporting people who have lost their jobs and face reduced opportunities.
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