The Organisation for Economic Co-operation and Development (OECD) believes that policymakers should fast-track Covid-19 vaccinations globally, to curb the emergence of the new variant that is likely to impede growth and recovery.
Nouriel Roubini, Professor Emeritus of Economics at New York University’s Stern School of Business, and chief economist at the Atlas Capital Team, shared an article on the OECD stating that the Omicron coronavirus variant is likely to intensify the supply-and-demand imbalances that are slowing growth and increasing costs.
The Paris-based international organisation increased its inflation forecast from three months ago, claiming that the new variant could delay the world economy’s recovery. As a result, the most important policy of nations should be to accelerate Covid-19 vaccinations globally.
The OECD, comprising largely richer member nations, raised its inflation forecast across the G20 to 4.4% for 2022 from the earlier forecast of 3.9% in September. Economists believe that the emergence of the new variant has raised the levels of uncertainty about the virus, which could slow the world’s economic growth and return to normalcy or lead to something worse.
Laurence Boone, chief economist of the OECD believes that central banks should be cautious about more persistent inflationary pressures and become more self-reinforcing. She also agreed that the US and UK would have to tighten their monetary stance, as the two countries have reported the largest increases in inflation forecasts for 2022.
Omicron threatens to intensify supply shortages and inflation, OECD warns https://t.co/FBmqzOhVfW
— Nouriel Roubini (@Nouriel) December 1, 2021
Tim Duy, professor of practice and senior director of the Oregon Economic Forum at the University of Oregon, retweeted an article shared by Christopher Rugaber, an economics reporter at the Associated Press, on US Fed Chair Jerome Powell stating in a Wednesday meeting with the House Financial Services Committee that the Federal Reserve was not at all sure about the Covid-induced inflation slowing down in the second half of 2022 as many economists expect.
Powell told the Committee that most economists believe that the current uptick in prices that have sent consumer inflation to a three-decade high in the US, has arisen largely due to Covid-related supply and demand disruptions. Increased consumer spending on laptops, appliances, computers, and furniture due to more time spent at home during the pandemic, and parts shortages have led to supply chain disruptions and higher prices.
The Fed Chair had earlier maintained that inflation would reduce when the pandemic eased. However, the emergence of new cases in the US and the Omicron variant last week has raised new concerns, with Powell claiming that the inflation has been more persistent than expected.
Janet Yellen clashed with many committee Republicans at the same meeting, who believed that the excess pandemic spending by the Biden administration had triggered the high inflation. They argued that the new $2tn social and environmental spending bill would further accelerate inflation.
She also supported the $1.9tn financial relief package introduced during the Covid-19 outbreak in March 2020, stating that it was a small contributor to the higher prices and that the uptick was largely caused by the supply chain bottlenecks.
— Chris Rugaber (@ChrisRugaber) December 1, 2021
Laurence Boone, chief economist of the OECD, retweeted an article shared by OECD Economics, on labour shortages having increased despite an incomplete jobs recovery, reflecting labour market disruptions amid a relentless pandemic. Economists believe that governments will have to increase efforts to help people reskill and find new jobs.
OECD data suggests that hours worked have not yet fully recovered, but shortages have emerged in members countries in the second quarter of 2021 compared to the fourth quarter of 2019. In addition, small businesses are struggling to find work, with the percentage of small businesses with job roles that received few or no qualified applicants having increased in the US in 2021 compared to pre-Covid trends.
Labour shortages have arisen despite an incomplete #jobs recovery, reflecting labour market disruptions.
Governments will need to increase efforts to help people cope with the sanitary situation consequences, reskill and find new jobs.7/9 pic.twitter.com/0EdE4pEpM6
— OECD Economics (@OECDeconomy) December 1, 2021