Household income in OECD states grows in first quarter

The real household income per capita of some of the world’s biggest economies increased marginally in the first quarter amid government measures to soften the economic blow of the Covid-19 pandemic.

Countries in the Organisation for Economic Co-operation and Development registered a 0.1 per cent increase in household income per capita despite an average 2 per cent fall in real gross domestic product.

“For the OECD area as a whole, real household income growth outpaced GDP growth by 2.1 percentage points, the largest positive gap between the two measures since the [2008] financial crisis,” the organisation said in its latest report.

A number of countries in the 37-member group unveiled stimulus packages to help their economies cope with the pandemic.

The US announced a $2.3 trillion (Dh8.4tn) relief package in March to support families and businesses affected by the crisis. The UK also introduced a $39 billion stimulus package.

However, among the seven major OECD economies, only the US recorded growth in real household income per capita, which shrank in Canada, France, Germany, Italy, the UK and Japan during the period.

Growth was also recorded in Australia (0.5 per cent), Belgium (0.7 per cent), Finland (1.2 per cent), Greece (0.8 per cent), Ireland (0.7 per cent), The Netherlands (1.6 per cent), Slovenia (1.5 per cent) and Sweden (1.3 per cent), according to the OECD data.

In the US, the growth is due to the “more limited impact of Covid-19 and, in turn, more limited containment measures” in the first quarter of this year, the report said.

The world economy is set to slide into its deepest recession since the Great Depression, and the International Monetary Fund has projected a 4.9 per cent contraction this year and a sluggish recovery next year.

The US, the world’s largest economy, is expected to contract by 8 per cent this year while growth in Germany, Europe’s largest and the world’s fourth-biggest economy, will shrink by 7.8 per cent, the fund said.

The UK economy is expected to contract by 10.2 per cent while Japan’s economy is set to shrink by 5.8 per cent.

“In Italy, and Germany, real household income per capita declined markedly in the first quarter of 2020, by 1.8 per cent and 1.2 per cent, respectively,” the report said.

The virus had infected more than 19 million people and killed more than 712,400 people worldwide as of yesterday, according to the Worldometers website.

More than 12.2 million people have recovered.