Economy on cusp of big surge, group says

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The U.S. economy will accelerate nearly twice as fast as expected this year as the expected passage of President Joe Biden’s $1.9 trillion stimulus plan, combined with a rapid vaccine rollout, ignites a powerful recovery from the pandemic, the Organization for Economic Cooperation and Development said Tuesday.

But countries that are stumbling in the pace of their vaccination campaigns, especially those in Europe, risk falling behind in the global recovery as a failure to beat back the spread of the coronavirus forces governments to keep swaths of their economies closed, delaying the chance for people to get back to normal lives, the organization said.

In its half-year outlook, the organization said the United States would expand 6.5% this year, up sharply from 3.2% forecast in December. The surge in the world’s largest economy will generate enough momentum to help lift global output 5.6%, from a 3.4% contraction in 2020.

China, which contained the virus earlier than other countries, remains a big global winner, with growth of 7.8% forecast.

Although a global recovery is in sight, spending by governments intended to jump-start their economies will have limited impact unless authorities accelerate national vaccine rollouts and relax virus containment measures, the report added. If vaccination programs are not fast enough to cut infection rates, or if new variants become more widespread and require changes to vaccines, consumer spending and business confidence would be hit.

“Stimulus without vaccinations won’t be as effective because consumers won’t go out doing normal things,” said Laurence Boone, the OECD’s chief economist.