The Day at a Glance | December 1 2020

The Top

· OECD reduces global 2021 estimates, calls on governments to maintain stimuli.

· OPEC+ postpones meetings until Thursday after no agreement was reached to extend production cuts.

· Jerome Powell assured that the US recovery will remain uncertain and weak before Congress, despite the news revolving around the development of vaccines.

Economic environment

The Organization for Economic Cooperation and Development (OECD) cut its global, 2021 growth estimates under expectations of seeing new outbreaks of the virus in the following months and the implementation of stricter mitigation measures. The organization reduced its global, 2021 growth estimate to 4.2% from the previously forecasted 5%, which was calculated 3 months ago. The OECD assured that the second wave of the virus has substantially slowed down the worldwide recovery and that there are still risks of the situation worsening if governments don’t extend fiscal aid or fail to distribute vaccines. The largest cut in estimates was made for Europe, which decreased from 7.6% to 4.2%, while for the US, the forecast was reduced from 4% to 3.2%. The statement made by the OECD reflects the global recovery`s fragility, in which the successful distribution of vaccines is a crucial factor as it could help put an end to quarantines and allow the permanent reopening of businesses. Any delay could have a negative impact on confidence, said OECD Chief economist Laurence Boone; “The toll on the economy could be severe, in turn raising the risk of financial turmoil from fragile sovereigns and corporates, with global spillovers”. Therefore, governments must maintain fiscal stimuli without worrying too much about levels of indebtedness; and they must focus on the most vulnerable social groups and companies. For the OECD, the virus also implies repercussions regarding the global economy`s structure as Europe and North America are now expected to contribute less to global growth, while China will explain 1/3 of the estimated global expansion in 2021.

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