Glimmers of Hope for World Economy, But Dangers Lurk

PARIS (AP) -
Shoppers pass a 40%-off sale sign on Nov. 28, on Chicago’s famed Magnificent Mile shopping district. (AP Photo/Charles Rex Arbogast)

Vendors broke out in applause in the flagship Galeries Lafayette department store in Paris as eager shoppers returned for the first time in a month, after yet another virus lockdown.

The reopening won’t be enough to make up for sales lost during the pandemic but reflects the glimmer of hope that forecasters are starting to see in the global economy.

The Organization for Economic Cooperation and Development predicted Tuesday that the world economy will bounce back to its pre-pandemic levels by the end of next year, though that recovery will be uneven across the countries and big risks remain.

In a report on the state of the economy, the OECD said that progress on coronavirus vaccines means that the outlook has improved for the first time since the pandemic began.

“The road ahead is brighter but challenging,” the international watchdog said.

China, which has brought its virus infections under control better than many major economies, will lead that economic recovery and account for a third of global growth next year. Europe, Japan and the U.S. will lag, while many poorer countries, particularly those that rely on tourism, will continue to suffer and require international aid, the OECD said.

It predicts the global economy will shrink about 4.2% this year and rebound by the same rate in 2021 before growing 3.7% the following year.

Across Europe, governments are reopening their economies as they get a handle on a second virus surge – but only gradually, and partially. Vast cobblestone plazas stand empty this festive season instead of hosting winter markets that usually electrify historic cities.

Lines of shoppers reappeared this week outside the fashion boutiques on the Champs-Élysées in Paris, but France’s famed cafés will remain shuttered for several more weeks, the tourists that are the country’s lifeblood are gone, and many small businesses aren’t expected to survive.

Jean-Noel Reinhardt, who presides over the Champs-Élysées Committee that oversees the avenue’s businesses, estimates a loss this year of up to 1 billion euros, and a downturn in business activity of 70%.

“The Champs-Élysées thrives on two types of visitors: foreign tourists who have not come this year, and the second population are those who work in the neighborhood … and these people are working from home online,” Reinhardt told The Associated Press.

The only saving grace, he said, is that most Champs-Élysées shops are worldwide brands that are part of larger conglomerates that might be able to absorb the losses in a way that smaller businesses can’t.

The OECD, which advises countries on economic policy, warned about this and other kind of economic inequalities that have been been worsened by the pandemic.

It recommended investing public money in reducing these inequalities as well as in other areas that deliver long-term benefits, including health, education and fighting climate change.

It said that governments should continue to support people who have been hit hardest by the virus and ensuing lockdowns, and that global cooperation is sorely needed to maximize the impact of government efforts to bring economies back to health.