THE prospect of a number of COVID-19 vaccines becoming widely available next year has lifted hopes for a faster economic recovery, the Organization for Economic Cooperation and Development (OECD) said today, projecting real gross domestic product (GDP) to reach pre-pandemic levels by the end of 2021.

"For the first time since the pandemic began, there is now hope for a brighter future," the OECD said, adding that the global economy is expected to gain momentum gradually in 2021 as vaccines are deployed through next year and states and banks continue actions to maintain fiscal support and mitigate the economic impact of the virus.

The OECD warned of "considerable" uncertainty in its latest economic outlook and said that subsequent waves of the infection could knock an initial rebound off course, stalling the recovery. However, it expects world GDP to rise by 4.2% in 2021 and by 3.75% in 2022.

The Paris-based organisation said activities will continue to be restricted with social distancing and partly-closed borders most likely remaining through the first half of 2021.

"Building back better requires leadership and action to build on the promises of vaccines, and to relaunch multilateral negotiations on trade, climate and digital standards to pave the way for a more sustainable growth and a society where opportunities are available for all," said Chief Economist Ms. Laurence Boone.

Together with reduced uncertainty and the fiscal relief provided throughout 2020, which the OECD expects to "pay off handsomely," the global economic rebound is anticipated to keep getting stronger as more and more activities re-open, limiting the aggregate income loss from the crisis.

The recovery will be uneven across countries and sectors and could lead to lasting changes in the world economy, said the report. Countries with effective testing, tracking and isolation programmes and where effective vaccinations can be distributed rapidly should perform relatively well, it predicts.

China, which started recovering earlier, is projected to grow strongly by 8% next year, accounting for over one-third of world economic growth in 2021. On the other hand, the contribution of Europe and North America to global growth "will remain smaller than their weight in the world economy" as the EU's forecast was slashed to 4.2% from 7.6% and U.S. projection lowered to 3.2% from 4%.

"Despite the huge policy band-aid, and even in an upside scenario, the pandemic will have damaged the socio-economic fabric of countries worldwide," stated the economic outlook. Policymakers were advised to maintain targeted support to vulnerable children, people and firms to reduce the "risk of the crisis leaving scars."