The Organisation for Economic Cooperation and Development (OECD) increased its 2021 global growth forecast to 5.6 per cent. It said the deployment of coronavirus vaccines and the massive US stimulus programme have greatly improved the world’s economic prospects.
The latest figure, which was released on Tuesday, is an increase of 1.4 percentage points from the OECD’s December forecast, and welcome news for the world economy which plunged into recession last year, when governments introduced restrictions to curb the coronavirus pandemic. However, “despite the improved global outlook, output and incomes in many countries will remain below the level expected prior to the pandemic at the end of 2022,” the OECD warned.
Meanwhile, US consumer prices increased solidly in February as the cost of gasoline rose further, leading to the biggest annual gain in a year, but underlying inflation remained subdued amid weak demand for services such as airline travel.
The US Labour Department said on Wednesday that its consumer price index (CPI) increased by 0.4 per cent last month after rising 0.3 per cent in January. In the 12 months ending February, the CPI gained 1.7 per cent, the largest rise since February 2020, after climbing 1.4 per cent in the 12 months ending January.
Last month’s rise was in line with economists’ expectations. Excluding volatile food and energy prices, core consumer prices notched up by 0.1 per cent in February after coming in unchanged for two months in a row. Economists had expected core prices to go up by 0.2 per cent.
Finally, the eurozone economy shrank at a faster rate than initially estimated in the fourth quarter of 2020, revised data from Eurostat showed on Tuesday. Gross domestic product fell by 0.7 per cent sequentially instead of 0.6 per cent estimated on February 16. The fall comes on the heels of a record 12.5 per cent rebound seen in the third quarter.
On an annual basis, GDP was down by 4.9 per cent, more than the 4.2 per cent decline in the third quarter but better than the five per cent drop estimated on February 16.
In the whole of 2020, GDP was down by 6.6 per cent versus the prior estimate of -6.8 per cent and +1.3 per cent registered in 2019.
This report was prepared by Bank of Valletta plc for general information purposes only.