OECD economic output rises 1.6% in second quarter but lags behind pre-crisis levels

Economic output in the Organisation for Economic Co-operation and Development remained below pre-coronavirus levels even as big economies within the bloc grew in the second quarter of 2021.

The average OECD growth rate was 1.6 per cent in the second quarter, up from 0.6 per cent in the first quarter, but it fell behind the gross domestic product levels of the fourth quarter of 2019, the Paris-based organisation said on Monday.

"When comparing economic activity in the second quarter of 2021 with pre-pandemic levels of the fourth quarter of 2019, GDP still lags behind for the OECD area as a whole [by] minus 0.7 per cent," the OECD said.

The OECD group of major world economies includes a number of countries in the Eurozone, as well as the US, Japan and the UK.

In May, the group raised its forecast for global economic growth to 5.8 per cent in 2021, up from an earlier projection of 4.2 per cent, as Covid-19 vaccination campaigns in many advanced economies improve business conditions and as the US government proceeds with massive fiscal stimulus.

In its latest report, the OECD said the UK recorded the strongest growth of 4.8 per cent in the second quarter of 2021, swinging from a contraction of 1.6 per cent in the previous quarter. This was followed by Italy with an expansion of 2.7 per cent, up from 0.2 per cent in the previous quarter.

Economic growth also increased in other major economies within the OECD, but to a lesser extent. In the US and Germany, GDP grew by 1.6 per cent, compared with an expansion of 1.5 per cent for the former and a contraction of 2 per cent for the latter in the previous quarter.

In France, GDP grew by 0.9 per cent in the second quarter, little changed from the previous three months, while Japan's economy expanded 0.3 per cent after shrinking 0.9 per cent in the previous quarter.

Canada recorded 0.6 per cent growth, down from 1.4 per cent in the previous quarter, making it the only "Major Seven" economy to register a slower growth rate in the second quarter.

The OECD's "Major Seven" economies are Canada, France, Germany, Italy, Japan, the UK and the US.

In the euro area and the EU, GDP growth turned positive in the second quarter of 2021, to 2 per cent and 1.9 per cent, respectively, after declining by 0.3 per cent and 0.1 per cent in the previous quarter.

When comparing economic activity in the second quarter of 2021 with pre-pandemic levels in the fourth quarter of 2019, the UK recorded the largest gap (minus 4.4 per cent), followed by Italy (minus 3.8 per cent) and France and Germany (both at minus 3.3 per cent).

The US is the only "Major Seven" economy that returned to pre-pandemic levels in the second quarter of 2021, with GDP exceeding pre-pandemic growth by 0.8 per cent.

Job creation must be at the heart of the recovery, the OECD said in July, with many nations unlikely to return to pre-coronavirus employment levels until the end of 2022.

Economic and labour market recovery will remain precarious while vaccination rates are uneven, because of new and more virulent Covid-19 strains, Mathias Cormann, the OECD’s secretary general, said at the time.