With output in most OECD countries now close to or above pre-pandemic levels, global economic activity since mid-2020 has exceeded expectations.
This reflects the prompt and massive policy support for firms and households from the outset of the crisis, the successful public health measures to limit COVID-19 transmission, and the rapid roll-out of vaccines.
The global recovery is projected to continue but global GDP growth is expected to moderate over time, from 5.6% in 2021 to 4.5% in 2022 and just above 3% in 2023.
Most advanced economies are projected to return to their pre-pandemic output path by 2023, but with greater debt and subdued growth potential.
Inflation is also projected to be higher in many OECD countries. As a whole, annual consumer price inflation is projected to fall to around 3.5% by the end of 2022, from close to 5% at the end of 2021, and ease to 3% in 2023.
Employment and participation rates are projected to pick up gradually through 2022-23, though to a different extent across countries, with OECD-wide unemployment falling to just over 5%, below the pre-pandemic rate.
But growth has not been distributed equally. Contact-intensive sectors and lower-income households have been particularly hard-hit. Among OECD countries, about 7.5 million fewer people were in work in the third quarter of 2021 than in the fourth quarter of 2019.
Moreover, worldwide, the state of the recovery remains significantly imbalanced, with middle-income emerging-market economies and low-income developing countries showing sizeable long-term economic scars from the crisis.