The Anglo-Saxons use the word Game changer To indicate events or decisions that change the natural course of events, always for the better. The huge stimuli released by the new US administration are on the way to being one of them for the world as a whole: The US economy will grow 6.9% this year, according to the forecast published by the Organization for Economic Cooperation and Economics Monday. Development (OECD), supported by cash transfers – which have enabled to revive consumption – and large infrastructure plans – that promise to modernize outdated physical capital while the instruments of activity are restarted.
So far, the think tank for rich countries, which has not yet included in its accounts the latest investments announced by the White House – so the bottom line could be even better – has projected that the leading global power will grow four-tenths less, 6.5%, in 2021. This The amazing performance of the United States, which shortly after this year’s equator should have already regained all of the land produced during the crisis, and China’s resistance capacity (+ 8.5%, seven-tenths more than expected so far) will lead the Eurozone, which It will rise 4.3% (four-tenths more than expected) despite its biggest shyness when it comes to spending. So is the global economy as a whole, which will grow 5.8%, one-tenth more. The global improvement is not as severe as applied in the March review, when it lifted growth by 1.4 points, but expectations continue to increase each time the schedule is updated.
“It is still time to spend it,” said the outgoing Secretary-General of the Organization for Economic Cooperation and Development, Angel Gurria, in an interview at EL PAÍS. This is exactly what the US is doing, challenging even those who warn of the danger of overheating or plunging inflation. The US rescue package will add three to four points to its GDP in the first full year in a row (2021) and one more point for global growth. All economies will benefit from higher demand in the US, but there are degrees: The benefit will be more intense for those most connected to the North American giants – Canada and Mexico – while Europe, Japan and China will do so somewhat less.
“The momentum in the US economy has been boosted with the help of stimulus and immunization,” economists at the Paris-based agency explain in the latest review of the global economy. “His substantial fiscal stimulus will help boost the global recovery.”
Unprecedented popular support
Behind the United States, the engine room of the global economy is much better than anyone could have imagined in December of last year, when Biden was not yet in office, and there were still two weeks before the first vaccine against Covid-19 in the United States. And one for the first dose to be injected in the UK. At the time, global growth was thought to be around 4.2% this year, barely surpassing the pre-crisis GDP level, but the significant improvement in outlook since then leaves Those expectations On paper: The world will grow further thanks to mass immunization in countries that have so far been able to afford it and also thanks to the Keynesian response more than ever in Washington, which continues to leave locals and strangers speechless.
In March 2020, when the world was filled with uncertainty as countries entered the confinement tunnel, the chief economist of the Organization for Economic Cooperation and Development, Lawrence Boone, already hinted at what was to come and appealed.the great explosion The budget “to avoid an economic depression of great proportions:” Central banks will not save us this time, but state budgets can do that, “he said. After a year and two months, her requests were met, and the French economist used the adjective” impressive “on Monday to indicate the expected performance For 2021, with the support of countries (financial and monetary) that are “unparalleled” the crisis was swift and effective.
However, Bonn adds, there are still some important headwinds, such as asymmetric distribution of pollen, much faster in the rich bloc than in developing countries. “The world is heading towards recovery today, albeit with many frictions. The risks of not sharing growth after the pandemic globally are high, and depend to a large extent on international cooperation,” wrote the head of the analysis department Think tankThis indicates that in many economies – including many advanced economies – by the end of 2022, the standard of living will not have returned to pre-pandemic levels. In short: Either those with potential are concerned about the state of the rest or the primary risk is a global recurrence with new mutations of the virus that will put everyone under surveillance.
Inflation and the risk of overreacting
A rapid revitalization of the economy is good news in itself, for what it signifies, but also because it gives companies and consumers confidence to invest and spend without much anxiety and fear, which in turn adds an additional point of optimism about the broker. – Growth term. The savings accumulated by families who are fortunate to maintain their sources of income are abundant, and “spending only a small portion of these accumulated surplus savings would raise GDP substantially.” Acting technicians say families could normalize earlier than expected.
But this massive transfer of savings into consumption also creates important dilemmas: With the recovery settled more consistently than expected, the warnings of those who see an inflationary exit from the crisis have multiplied. This may be the ultimate motive.
The OECD does not completely rule out this possibility and states that in the coming months this indicator will likely continue to rise due to a combination of the underlying effect (the comparison is established on an annual basis with a year in which prices were low due to the economic paralysis caused by the virus), and the recovery of materials. Raw and bottlenecks in supply chains for some basic products these days, such as semiconductors. However, he believes that the rate hike will be “temporary” and that the greater risk is that overly fearful financial markets interact and cause an increase in the interest rates at which countries and companies are financed.
“In recent months there have been signs of increased pressure on the cost side,” agency technicians admitted. But idle capacity is still large and this should prevent a large and sustainable rise in core inflation. [la que no tiene en cuenta ni la energía ni los alimentos, de largo los elementos más volátiles de la cesta de la compra]. They explained that it is unlikely that unemployment rates will return to pre-pandemic levels until the end of 2022 at the earliest, so the pressure should only be modest in the next eighteen months. Temporarily as long as pressure on core rates remains limited. ”The mistake of 2011, when the European Central Bank raised interest rates too early to ward off the risk of alleged inflation, is still fresh in the memory.