The OECD stated that the global economic outlook is bright and will leave room for governments to shift from a package of emergency assistance to more targeted measures, with a focus on investment.

The Paris-based organization said that this year’s global output will increase by 5.8%, much higher than the 4.2% forecast in December. The report added that the growth rate for the second year is 4.4%, which will restore most of the world to pre-pandemic activity levels.

However, the OECD also warned that the recovery will be uneven, and the living standards of many advanced economies will still be much lower than expected before the pandemic.

The new forecast shows that thanks to the US fiscal stimulus and the Covid-19 vaccination plan, economic output by the end of 2022 will be slightly higher than expected in November 2019.

The same is true for China and smaller Germany. But in many European countries, especially those that rely on tourism, their output will be much lower than before the pandemic. The gap in emerging markets will be even greater: India’s output will be nearly 10% below the November 2019 forecast.

The OECD said that in the long run, among the G7 countries, especially in the United Kingdom, the damage to economic productivity may be the most serious, and the scarring effect caused by the pandemic in the United Kingdom will further intensify.

Laurence Boone, chief economist of the OECD, said: “As countries transition to better prospects, I believe that governments are already doing enough to promote growth toward higher and better paths. It will be dangerous.”

She added that the support provided by many countries to businesses and families helped protect people’s incomes and limit damage to the economic supply side.

But this crisis emphasizes the need to improve health and education systems, as well as to provide funding for digital transformation and climate change. Boone said that with the reopening of some sectors while other sectors are still restricted, support should become more targeted and “the focus should be on investment.”

The biggest risk of the OECD’s optimistic forecast is the failure to ensure that the supply of Covid vaccine can reach emerging and low-income countries.

Boone said: “The global economic and social costs of maintaining closed borders dwarf the popularization costs of vaccines, testing, and health supplies.” “

Another concern is the high level of debt held by small and medium-sized companies, especially in European countries, which mainly provide support to companies through loans rather than grants.

According to the OECD, one method might be to convert some pandemic-related loans into grants, and the conditions for repayment are performance and regular assessment of viability.

Boone is more optimistic about the risks of expansionary policies, especially in the United States, where such policies have contributed to persistently high inflation.

The OECD admits that due to port congestion and bottlenecks in some rapidly opening sectors, prices may rise in the short term.

But it believes that there are still gaps in the labor market, which will control wages, and by the end of 2022, the median employment rate in OECD countries will remain below the pre-crisis level.