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G20 economies rebound to pre-crisis levels in Q1 but growth is uneven, OECD says

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The world’s biggest 20 economies rebounded to pre-pandemic levels in the first quarter of 2021 but with major differences between countries, data shows.

Year-on-year gross domestic product growth across 19 countries plus the European Union rebounded to 3.4 per cent in the first quarter of 2021, after contracting 0.7 per cent in the previous quarter, according to the Organisation for Economic Co-operation and Development (OECD). The G20 area’s economic output grew 0.8 per cent in the first three months of the year, compared to the fourth quarter of 2020.

Among the G20 economies, India, Turkey and China, whose GDP was already above pre-pandemic levels in the previous quarter, continued their recovery.

India, which has been hammered by the pandemic and reported the world’s highest daily Covid-19 deaths on Thursday, grew 2.1 per cent in the first quarter versus 9.3 per cent in the fourth quarter. Growth in Turkey, whose economy is largely fuelled by domestic consumption and was fluid before the pandemic, was flat at 1.7 per cent.

China, the world’s second-largest economy, expanded 0.6 per cent from 2.6 per cent in the previous quarter.

GDP in Australia, Korea and Brazil also returned to pre-pandemic levels in the first quarter of 2021, growing by 1.8 per cent, 1.7 per cent and 1.2 per cent, respectively.

For the rest of the G20 economies, GDP is lagging behind pre-crisis levels, with countries recording diverging developments in the first quarter of 2021.

Output in the US, the world’s largest economy, accelerated 1.6 per cent in the first quarter of 2021, from 1.1 per cent in the fourth quarter of last year. Italy, Europe’s fourth-largest economy, returned to marginal growth of 0.1 per cent, following a contraction of 1.8 per cent.

Germany, Japan, the UK and Saudi Arabia’s economies contracted during the first quarter from the previous three months.

In France, the euro area’s second-largest economy, GDP continued to shrink for the second consecutive quarter, although at a slower pace of 0.1 per cent, after contracting 1.5 per cent.

Overall, the United Kingdom and Italy recorded the largest gaps in pre-pandemic GDP levels, at minus 8.7 per cent and minus 6.4 per cent, respectively. However, Germany, France, the euro area and the European Union still recorded gaps of more than 4 per cent.

In April, the International Monetary Fund raised its global economic forecast for the second time this year, thanks to a faster-than-expected Covid-19 vaccination drive, as well as fiscal and monetary support provided by governments and central banks.

The global economy is now set to grow 6 per cent this year, compared with a previous forecast of 5.5 per cent, the Washington-based lender said in its latest World Economic Outlook. However, it warned policymakers about an uneven recovery as richer countries rebound faster from the crisis.

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