PARIS — The US economy will accelerate twice as fast as expected this year as the coming passage of President 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 businesses 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.”
The organization urged countries to go faster on vaccine campaigns to reopen their economies and said more vaccines needed to reach low-income countries — otherwise, parts of the developing world would remain under prolonged lockdowns or closed to travel, delaying a rebound.
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.
More than 60 million people in the United States have received at least one dose of the COVID-19 vaccine. And Biden’s rescue package, which the House is expected to give final approval to Wednesday, includes direct payments of up to $1,400 to hundreds of millions of Americans and the extension of a $300-per-week supplemental unemployment benefit until September.
Economists have generally expected that the sudden and deep pandemic-induced recession that swept around globe last year would be followed by an upswing in growth as businesses reopened and people returned to normal lives. But Tuesday’s report adds to a growing body of forecasts suggesting the United States, in particular, could experience a post-COVID boom.
The OECD said the United States, which has 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.
Still, the duration of a global recovery will depend on the race between vaccines and emerging variants of the virus, the organization added. If vaccination programs are not deployed fast enough to cut infection rates, or if new variants spread and require changes in vaccines, consumer spending and business confidence will be hit.
Accelerating the vaccination programs would allow the world to “get ahead of the virus this year, and by late 2021, the level of global activity would return to where we thought we’d be before the pandemic,” Boone said.
But if vaccine distribution is erratic, confidence will be affected, and businesses and consumers will save government relief money, not spend it.
In Europe, and Germany and France in particular, a mix of poor public health management and slow vaccination programs is weighing on a recovery, despite billions in government support.
Such spending “won’t be fully effective as long as the economy doesn’t reopen,” Boone said.
The euro-area economy, with 19 countries that use the currency, is expected to grow 3.9 percent this year, slightly more than forecast in December but slower than the United States. In Britain, which sped a national vaccination rollout late last year, the economy is expected to grow 5.1 percent, up from an earlier 4.2 percent forecast.
Even with the improved outlook, the pandemic is widening gaps in economic performance between countries and between sectors, the report said.
The divergent pace risks increasing social inequalities, especially for young people and those working in sectors hit hard by the pandemic, such as tourism and hospitality. These vulnerable groups face long-term damage to job prospects and living standards.
“Particular attention needs to be paid to supporting young people and the less skilled to avoid a repeat of the long-term damage caused to the job prospects of these vulnerable groups after the financial crisis of 2008,” the report said.