Colin Brinsden, AAP Economics and Business Correspondent
(Australian Associated Press)
The global economic recovery faces a “precarious and uncertain” outlook until COVID-19 vaccinations are deployed throughout the world, the Organisation for Economic Cooperation and Development warns.
In its interim economic outlook, the OECD says governments must get people vaccinated as quickly as possible to save lives, preserve incomes and bring the virus under control.
“Failure to ensure the global suppression of the virus raises the risks that further new, more-transmissible variants continue to appear,” it says in the report released on Tuesday.
The Paris-based institution says the economic impact of the Delta variant has so far been relatively mild in countries with high vaccination rates.
But elsewhere it has lowered momentum and added to pressures on global supply chains and costs.
“Mobility weakened in some Asia-Pacific countries, including Australia, in which more stringent containment measures have been reintroduced,” it says.
It confirms it now expects the Australian economy to grow four per cent in 2022 rather than 5.1 per cent that it had predicted in May.
For 2023, it sees growth of 3.3 per cent, down slightly from the 3.4 per cent it earlier forecast.
The OECD released a study on Australia last week, saying the economy is expected to contract in the September quarter because of COVID-19 restrictions that have its two most populous states in lockdown.
For the global economy, the OECD is forecasting growth of 5.7 per cent for 2021 and 4.5 per cent in 2022, little changed from its earlier forecasts.
However, the OECD says “sizeable uncertainty remains”.
“Faster progress in vaccine deployment, or a sharper rundown of household savings would enhance demand and lower unemployment but also potentially push up near-term inflationary pressures,” it says.
Conversely, slow vaccine rollout progress and the continued spread of new virus mutations would result in a weaker recovery and larger job losses.
The OECD calls for central banks to maintain accommodative monetary policy, while providing clear guidance on future moves and the extent it would tolerate an overshooting of its inflation targets.
It also urges governments to remain remain flexible and maintain policies contingent on the state of the economy.
“A premature and abrupt withdrawal of policy support should be avoided whilst the near-term outlook is still uncertain,” it says.