The 37-member organisation's new report shows a trend of significant financial recovery across the world. In terms of least GDP changes from pre-pandemic projections, Turkey stands second only to the US in 2021
The pandemic has led many to lose their jobs, creating a devastating economic decline across the world. But a new report by the Organisation for Economic Co-operation and Development (OECD) suggests that global economic recovery is on the horizon, albeit in slow motion.
“Global economic prospects have improved markedly in recent months, helped by the gradual deployment of effective vaccines, announcements of additional fiscal support in some countries, and signs that economies are coping better with measures to suppress the virus,” the report noted.
Vaccine distribution and management of new Covid-19 variants will be crucial in determining which direction the world will be heading to in the near future, the report says.
According to the report, the global 2021 GDP growth will be 5.6 percent, while it will decline to 4 percent in 2022. The global output is expected to reach its pre-pandemic level in the middle of this year. But even at the end of 2022, national output and incomes are likely to continue to stay below the level predicted ahead of the pandemic.
But some economists are sceptical about the report.
“I think that while both global and national GDP levels are good indicators to measure performances of the world economy and country finances, they do not show how much the levels of social welfare have been improved,” says Gokhan Ovenc, a lecturer of the economics department at the Istanbul University.
It means that while the global economy is expected to emerge from the gloom, national economies, particularly income and employment levels, might continue to suffer significantly.
As long as Covid-19 continues to rage across the world, a healthy global recovery may not be easy to attain. This is because trade and investment, two important components of any recovery effort, will still be regarded as risky ventures, according to Ovenc. He exemplifies how the automotive industry continues to suffer as the transportation sector, specifically the airline industry, have incurred massive losses.
“The transportation sector is crucial. Without its normalisation, we can not expect a true global recovery,” Ovenc tells TRT World. Also due to currency fluctuations, many investors could not commit to long-term investments, he adds.
But with summer on its way, he also thinks that some sectors, like tourism and services, will somewhat accelerate and do better over a temporary period.
“We will see the emergence of some delayed demand in upcoming months,” he says. But he still believes real recovery is way off, possibly 2023.
Turkey stands next to the US
The OECD report also showed that Turkey’s recovery efforts kept the country’s GDP levels high as opposed to many emerging-market economies, whose output continues to remain weak.
“Turkey is a notable exception, largely reflecting the rapid rebound in the latter half of 2020,” the report points out. “Activity moved above pre-pandemic levels in China, India and Turkey, helped by strong fiscal and quasi-fiscal measures and a recovery in manufacturing and construction,” it adds.
In terms of GDP changes, when compared to the pre-pandemic forecasts, in Q4 2021, Turkey has appeared to be ranked the second least damaged with -0.8 percent next to the US, which recorded the only positive score across the world.
Many other countries with strong economies have appeared to suffer enormously due to Covid-19 restrictions. India lost nearly 8 percent of its GDP, while the UK’s appeared to decline by nearly 5 percent. The Eurozone, one of the world’s richest areas, also lost 3.8 percent of its GDP compared to pre-pandemic levels.
Despite experiencing a decline in GDP in 2020, India's is expected to jump by 12.6 percent in 2021, putting the country in the lead, followed by China and the US. While China will grow at 7.8 percent, the US will experience a 5.9 percent growth.
In 2021, Turkey was also up in the GDP growth scoreboard with 5.9 percent, coming fourth overall after the US. The country’s GDP growth level is also higher than the world’s one, which stands at 5.6 percent.
Ovenc, the economist, thinks that the Turkish economy might do better in the summer, as Britain and other European countries ease transportation restrictions for their citizens. Turkey is one of many popular holiday destinations.