The Organisation for Economic Co-operation and Development (OECD) published its latest economic outlook last week. There were no hidden surprises in the 221 pages, whose narrative echoed that the pandemic continues to cast a long shadow over the world’s economies, with the silver lining being an improved prospect for the global economy due to vaccinations and stronger policy support. However, the path to recovery will be an uneven one.
The headlines gave a forecast for global growth of +5.75% in 2021 and +4.4% in 2022, a sharp rise from the decline of -3.5% in 2020. The biggest risks revolve around the deployment of vaccines not being fast enough to stop the transmission of the virus and the emergence of new, more contagious variants. This will hamper the pace at which containment measures can be relaxed and stifle the expected boost to consumer confidence and spending.
A relaxation in lockdown measures did allow for the G7 finance ministers to meet face-to-face in Cornwall over the weekend. Global taxation was highest on the agenda and it was agreed that global corporate taxes should have a minimum level of 15%, and large companies with a profit margin of at least 10% should be taxed where they conduct business. If negotiations go well, the agreement could be extended to the G20, and could see the end of countries competing on lower tax levels and an end to the race to the bottom.