China’s early recovery from the impacts of the COVID-19 pandemic is expected to make it the biggest contributor to global economic growth in 2021.
The Economic Outlook Report released by the Organisation for Economic Co-operation and Development (OECD) on 1 December forecasts a contraction in the global economy of 4.2% in 2020, as compared to a prior forecast of a 4.5% decline made in September.
Global economic growth is expected to average 4% over the next two years, rising to 4.2% in 2021 followed by a 3.7% increase in 2022.
The OECD expects China to be the only major economy to post economic growth in 2020, with a GDP increase of 1.8% this year.
China is expected to grow by 8% in 2021, accounting for more than one third of global growth that year, followed by growth of 4.9% in 2022.
The OECD said that the growth contribution made by Europe and North America in 2021 “will remain smaller than their weight in the world economy,” while the economic impacts of COVID-19 could “potentially [lead] to lasting changes in the world economy.”
The US is expected to see an economic contraction of 3.7% in 2020, followed by growth of 3.2% in 2021 and 3.5% in 2022.
Europe is expected to see a real GDP decline of 7.5% in 2020, followed by growth of 3.6% in 2021 and 3.3% in 2022.
“Despite the huge policy band-aid, and even in an upside scenario, the pandemic will have damaged the socio-economic fabric of countries worldwide,” said the OECD report.
“People living in poverty and usually less well covered by social safety nets have seen their situation deteriorate even further.
“Children and youth from less well-off backgrounds, and less qualified adult workers have struggled to learn and work from home, with potentially long lasting damage.”