PARIS – “Europe must rush on vaccination”. Laurence Boone, 51, chief economist of the OECD, is responsible for the outlook that outline the next world scenarios, even more scrutinized in this phase of great uncertainty. A few days ago, the French economist revised upward the growth forecasts of global GDP in 2021, from +4.2 to + 5.6%, in the wake of the combined effect of vaccination and the stimulus plan presented by the administration Biden. But the newfound optimism only touches the Old Continent. “The best economic policy is the vaccination campaign” underlines Boone who has worked in the past at the Elysée and is a member of the think tank Circle of Economists.
Lars Feld: “Europe and the US will find new agreements to curb China”
by our correspondent Tonia Mastrobuoni
The United States is running, is Europe lagging behind?
“The factor that has allowed us to revise the forecasts upwards is the American fiscal stimulus: 1.9 trillion dollars in addition to the 900 billion dollars already announced in December. Our estimate is that the plan will push US growth by nearly 4 points in 2021. The US plan will benefit the entire American continent, especially Mexico and Canada, but also other countries. We have positively revised almost all growth estimates in the G20 except for the eurozone countries where there has been an adjustment of only half a point after the announcement of Biden’s plan ”.
Why?
“The reason is simple: with the delay of vaccines, the persistence of restrictions on mobility, and therefore of economic activity, this year the eurozone will grow by 3.9%, with differences between Germany (3%), France ( 6%), Italy (4%). These are growth rates that we have not seen for some time. But they make it possible to only partially recover the fall recorded in 2020. While the United States will be able to say that it has filled last year’s growth loss by autumn, Europe will only do so at the end of 2022 ”.
What changes with Biden’s mega aid package: 1900 billion to restart the economy (not just the US)
di Alberto Flores D’Arcais
How do you see the coming months?
“The hypothesis on which our projections are based is that in the coming months there will be a powerful increase in the production and distribution of vaccines, with a majority of the population vaccinated by the end of 2021. It is a reasonably optimistic scenario. If, on the other hand, there were further delays and new complications linked to the variants, we could fall below these forecasts ”.
Is there a direct link with the recovery?
“We already see in countries where a large part of the population such as Israel has been vaccinated that life can regain a normalcy within internal borders and economic activity restarts. The recovery is also much faster than in previous crises thanks to the important aid granted to companies during the worst phase. On the other hand, in Europe, due to the delay in the vaccination campaign, there are still many restrictions on activity, the economy is still very slow and unemployment is starting to increase slightly despite the social safety nets. The more time is lost, the more the economic and social cost increases ”.
Are the 750 billion euros of the Recovery Plan a small thing compared to Biden’s plan?
“The United States has to do much more because it does not have the social safety nets system that exists in European countries. Europe has learned a lot from the previous financial crisis, it has responded in a coordinated and rapid way on the economic level. Unfortunately, joint action on vaccines – which I think was necessary – has not so far been so quick and effective. The problem I see for the eurozone is not so much on the sums but on the timing. The slowness with which we are vaccinating could make the recovery measures ineffective. The current turnaround in the United States is due to the combined effect of the stimulus plan and the reopening of the economy, thanks to the race for immunity. The two go together. The Recovery Plan, or any other stimulus plan, even with increased sums, alone will not be enough, and indeed risks continuing to feed the savings accounts as is partly happening. The best economic policy is the vaccination campaign ”.
What other risks do you see, in particular for Italy?
“Speed on vaccination is also important for another reason. One of the most affected sectors is that of tourism which represents on average 8% of employment in the OECD with peaks of up to 15% in some countries. The delay of a few months on the vaccination campaign can become extremely penalizing for economies very linked to tourism such as Greece but also France and Italy. The summer tourist season begins in a few months. Every week counts in the vaccination campaign to be able to reach the summer with the possibility of a reopening of tourism, at least partially “.
.