Global growth: uncertainty is increasing

The OECD presented its forecast for economic growth this morning. The central scenario retains a rebound of 5.6% this year and an increase at a sustained rate of 4.5% in 2022, then, a moderation to 3.2% in 2023. But the new Omicron variant threatens to derail these assumptions. Indeed, the organization has underlined the danger of the risk of weak vaccination and the emergence of new strains that are more deadly and resistant to currently available vaccines. New restrictions on mobility and the closure of maritime infrastructures, such as ports, can damage international trade, as it has already happened in China in the past months. The result of this are new trade barriers, increasing delivery times, component shortages and additional bottlenecks in production chains. These new supply disruptions could create additional upward pressure on inflation. Indeed, the OECD expects inflation to continue to rise, reaching a peak during the first quarter of 2022. For 2022 as a whole, the rise in consumer prices in the OECD would reach 4.25% (3.5% in industrialized countries). Inflation is expected to gradually decline to around 3% across OECD countries by 2023. “Under the current circumstances, the best thing central banks can do is wait until pressures on the supply are decreasing” estimates Laurence Boone, the chief economist of the OECD. However, the pressure on prices seems more lasting across the Atlantic and across the Channel. The OECD forecasts therefore currently include a high risk of uncertainties and derailment.