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Summary
- US recovery plan to have beneficial spillovers for neighboring economies, including Canada.
- Canada’s economy to expand at 4.7 per cent this year, says the 37-member OECD.
- US economy to grow at a record pace of 6.5 per cent, the fastest expansion since 1984.
President Joe Biden’s US$1.9-trillion recovery plan will also benefit Canada as both countries are entwined with a shared boundary and economic interdependence, Paris-based Organization for Economic Co-operation and Development (OECD) said on Tuesday.
The 37-member elite club of developed countries further said that Canada may see a 4.7 per cent growth rate this year, while the US may expand at 6.5 per cent, noting that a strong fiscal boost rolled-out by the Biden administration will have beneficial spillovers for neighboring economies.
The US plan would also help expand the global economy by 5.6 percent in 2021 since it will at least 1 percentage point to the overall growth, stated the OECD. Its latest forecast is 1.4 percentage points higher than its previous forecast in November when it had pegged the growth at 4.2 percent.
However, it has also flagged some possible areas of disruptions from a strong rebound in the US. The group observed that a US sharp recovery may create an economic imbalance in the developing world where the governments are still struggling to procure vaccines and other resources for recovery.
For instance, it said, the recent spike in US Treasury bond yields, due to the marked improvement in the economy in recent weeks, may trigger capital flight from emerging economies. However, regardless of the situation abroad, the home economy will expand at a record 6.5 percent. It will be the fastest expansion of the US economy since 1984, the group observed.
Pic Credit: Pixabay.
Covid Fight Gets A Stimulus Boost
The global economy, which had declined by 3.4 percent in 2020, is slowly limping back to health, but much more collective efforts will be needed to reach the levels of the pre-pandemic period, it said.
The latest stimulus is the largest of the previous two announced by the Trump administration. Besides massive capital outlay for coronavirus fight and businesses, it also guarantees monthly payment of US$1,400 per individual for eligible households in covid assistance through September.
The push for rapid vaccination has paid off as the number of new cases has significantly dropped over the past few weeks. The US Food and Drug Administration has recently cleared a Johnson & Johnson vaccine that is found to be effective with a single dose. Its rollout in May would further bolster the US covid fight along with the vaccines from Pfizer-BioNTech and Moderna.
