Building a resilient recovery

The fallout from Russia’s invasion of Ukraine is focusing minds on energy security, especially in Europe. A cold winter could deplete EU gas storage levels to dangerously low levels.

A further energy shock may tip many European economies into recession. In the short term, efforts must focus on shoring up confidence through curbing energy consumption and diversifying supply. A failure to do so risks yet higher prices and, potentially, energy rationing for industry.

In the longer term, policy makers will have to rethink the broader energy security framework – in particular how to channel more investment into a transition that will support sustainable, secure energy.

For the first time at the OECD, Youthwise, the OECD’s youth advisory board – with support from youth organisations and OECD experts – delivered their vision to Ministers at the Organisation's annual meeting on 10 June 2022.

Fake, substandard goods – including medicines, test kits, PPE and even vaccines – undermine trust and require a robust policy response to promote clean trade in the COVID-19 recovery.

The International Energy Agency proposes 10-point plan with immediate impact to reduce dependency – and actions to put long-term energy needs on a more resilient and sustainable footing.

Sixty-seven evaluations of government responses to the COVID-19 crisis provide lessons for managing risk, decision-making and communications.

Frontline workers – those who worked in their physical workplace and in close contact with other people during the COVID-19 pandemic – were more likely than remote workers to feel that their job was insecure (12% vs. 7%).

They were also more likely to report bad general health (6% vs. 4%) and slightly lower levels of mental well- being (53 vs. 55) measured using the WHO-5 mental well-being scale (0-100; <50 is considered at risk of depression).

Although there is a lack of pre-pandemic comparable data for the same workers, these results affirm the hypothesis that frontline workers in general are more likely have lower quality jobs and well-being. The likely reduction in labour supply to frontline occupations as a result poses a challenge for policy makers seeking to build a more resilient labour force.

The speed and scale of the macroeconomic policy response to the COVID-19 crisis is unprecedented in peacetime.

The extensive use of direct fiscal policy tools to offset the most damaging effects of the pandemic necessarily had a marked impact on OECD-area governments’ total gross borrowing (new borrowing plus refinancing needs). Having remained stable since the 2008 financial crisis, it jumped more than 70% from USD 9.6tn in 2019 to above USD 16.4tn in 2020 – the highest increase in a single year, and nearly double the rise during the 2008 financial crisis.

While debt levels are projected to fall as economies recover, governments have sought to rebalance their sovereign debt portfolio maturities to strengthen resilience against refinancing risk.

USD 6.3bn of COVID-19 vaccine aid was given to developing countries in 2021 – equivalent to nearly 857 million doses. This was 3.5% of total official development assistance (ODA) from members of the OECD’s Development Assistance Committee (DAC), lifting it to an all-time high of USD 179bn, up 4.4% in real terms vs. 2020. Excluding COVID-19 vaccines, it was up 0.6%.

Challenges lie ahead. Spiking commodity prices following Russia’s invasion of Ukraine means the spectre of food insecurity looms large.

Combined with significantly higher energy prices and mounting fiscal pressures that are constraining growth, additional ODA for the hardest hit will be needed. Governments’ efforts to build a resilient economic recovery from COVID-19 just got harder.

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Face masks, testing kits and COVID-19 vaccines are three products many people have become rapidly familiar with since the outbreak of the pandemic.

New OECD analysis highlights the essential role played by global supply chains in ensuring steady access to a wide range of materials and ingredients as manufacturers rapidly scaled up production to meet surging demand.