India could be back on top as the world’s fastest growing economy this year
India’s gross domestic product is projected to expand by 12.6% during the country’s fiscal year starting in April, according to a forecast released Tuesday by the Organization for Economic Cooperation and Development.
The OECD also unveiled major upgrades to its global outlook on Tuesday, saying that “economic prospects have improved markedly in recent months” thanks to the deployment of coronavirus vaccines and additional stimulus announcements. The Paris-based agency also said there were signs that recent containment measures weren’t hurting the economy as much as earlier efforts.
“This may reflect a more careful targeting of public health measures and income support,” the group said, adding that businesses and consumers have adapted to the restrictions.
The OECD now expects the world economy to grow by 5.6% in 2021, up from an estimate of just 1.4% in December.
US could grow by 6.5%
The United States’ economy is now expected to expand by 6.5% this year, a major improvement from a previous forecast of 3.3%. The agency pointed to the effects of “strong fiscal support” from President Joe Biden’s $1.9 trillion stimulus package.
But the outlook remains highly uncertain due to the pandemic. The OECD noted that vaccine campaigns are moving at different speeds around the world, and there’s still the chance of new mutations that resist vaccines.
The OECD acknowledged that price pressures are building on some fronts.
“A faster-than-expected recovery in demand, especially from China, coupled with shortfalls in supply, has pushed up food and metals prices considerably, and oil prices have rebounded to their average level in 2019,” it said.
But the agency emphasized that with economies and the job market still weak, central bankers should maintain loose monetary policies that have boosted the recovery even if inflation overshoots some targets.
“Transitory factors that push up headline inflation do not warrant changes in the policy stance,” it said.
