Advanced economies drive global recovery – archyworldys

The global economic recovery continues, but the gaps are widening between developed and emerging countries. In its “Interim Economic Outlook”, published Tuesday, September 21, the Organization for Economic Co-operation and Development (OECD) expects global growth of 5.7% in 2021, a figure almost identical to that of its May forecasts, thanks to a rebound in gross domestic product (GDP) in the euro zone. “The recovery remains very uneven, with singularly different results depending on the countries, sectors and demographic groups in terms of production and employment”, however tempers the institution.

In advanced economies, vaccination coverage, which is close to 70%, eliminates the risk of confinement. Strong demand is driven by the rebuilding of stocks, the use of savings accumulated over the past months, the fall in unemployment and public assistance programs. In contrast, in developing economies, where vaccination rates are low, particularly in Asia-Pacific, health restrictions imposed by the authorities have weighed on the recovery.

With debt that has grown from 52% to 62% of GDP over the past eighteen months, emerging countries also have limited room for maneuver to support activity. OECD conclusion: “At the end of 2022, the production deficit compared to the anticipated trajectory before the pandemic [de Covid-19] should be twice as important “ in emerging markets than in advanced G20 economies.

The recovery will be accompanied in 2021 by a rise in high inflation in the United States, Canada and the United Kingdom, which should be even greater in developing countries such as Turkey (+ 17.8%) , Brazil (+ 7.2%) or India (+ 5.5%), where energy and food, whose prices have soared, occupy a more important place in expenditure. “The increase in the cost of raw materials and maritime transport is a major contributor to the surge in import and consumer prices observed over the past year”, notes the OECD. In the summer, commodity prices jumped 55% year-over-year and world food prices hit a ten-year record. In 2021, the costs of shipping have tripled.

Readjustment of supply to demand

Production and transport capacities are still undersized in relation to demand. Temporary containment measures, especially in Asia, physical distancing and hygiene have slowed the loading and unloading of containers, leading to congestion at major ports. “They have also slowed down activity in construction and agriculture, by restricting the mobility of migrants who work in these sectors”, adds Laurence Boone, chief economist of the OECD.

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