Stimulus plan, vaccines expected to lift economy
PARIS — The U.S. economy will accelerate twice as fast as expected this year as the coming passage of President Joe Biden’s $1.9 trillion stimulus plan, combined with a rapid vaccine rollout, ignites a powerful recovery from the pandemic and helps lift global growth, the Organization for Economic Cooperation and Development said Tuesday.
But countries that are stumbling in the pace of their vaccination campaigns, especially in Europe, risk falling behind as a failure to beat back the spread of the virus delays a reopening of business and prevents people from returning to their normal lives.
In its interim outlook, the economic organization laid out an uncomfortable reality facing governments as vaccine campaigns around the world make uneven progress: Simply pumping money into an economy is not enough for a revival; countries will need to offer both economic stimulus and an effective vaccine rollout.
“Stimulus without vaccinations won’t be as effective because consumers won’t go out doing normal things,” Laurence Boone, the OECD’s chief economist, said in a news briefing. “It’s the combination of health and fiscal policy that matters.”
In the United States, the steady supply and distribution of vaccines, together with a reopening of the economy and fiscal stimulus, are expected to “significantly boost the recovery as people are able to return to shop, dine and travel,” Boone said.
The OECD said the U.S., the world’s largest economy, would grow 6.5 percent this year, up sharply from a 3.2 percent forecast in December. The surge will help generate enough momentum to lift global output to 5.6 percent — up 1 percentage point from the December forecast, after a 3.4 percent contraction in 2020.
China, which contained the virus outbreak more quickly than the United States and other countries, will continue to benefit with growth of 7.8 percent forecast for this year. The government has poured money into infrastructure projects and extended loans and tax relief to support business and avoid pandemic-related layoffs. India’s economy is expected to grow 12.6 percent after a 7.4 percent fall in 2020, the organization added.