Prudent optimism has become the new state of mind for large economic organizations. All forecasts point to a powerful global recovery this year and the next thanks to the triple conjunction of monetary stimuli, public spending and savings flow, but if the pandemic slap has taught anything, it is to introduce conditionals and flee from certainties. French Laurence Boone (Boulogne-Billancourt, France, 52 years old), chief economist at the OECD, adheres to that restrained spirit when asked if this is all. If with the 5.7% growth in world GDP for this year and the advance of 4.5% for the following year that the latest numbers of the entity foresee, the crisis can be considered over and enter a new phase. “It can be said that in the majority of advanced countries we will soon regain pre-crisis levels. But we are still conditioned by the health situation. And as long as it is not fixed, it is difficult to say that it is over, ”he says in a telephone conversation from Paris.
A doctorate from the London School of Economics, a professor at the prestigious Parisian School of Sciences Po and an advisor to President Emmanuel Macron, a couple of weeks ago Boone was chosen among the 40 most outstanding women in the country by the French edition of Forbes. From his position at the OECD, in command of 180 employees who are in charge of preparing the reports published by the think tank of rich countries, Boone explains that world growth forecasts have barely changed since their last diagnosis in May. Global activity will be one tenth worse this year and one better next year. An almost imperceptible dance of figures that he attributes to the fact that the positive surprise of the vigorous European summer has been eclipsed by the worst evolution of the United States, more hit by the delta variant of the virus.
Outside the circle of rich countries to which both blocs belong, vulnerabilities are obvious, and Boone warns of an uneven way out of the crisis. “Countries have not been affected in the same way by the virus and they do not have the same capacity to deal with it with vaccination. In addition, Europe, the United States, the United Kingdom or Australia have a lot of budgetary and monetary policy space, but in emerging countries that margin is less generous, which means that support is less generous ”.
The work of making predictions, linked as rarely to what happens in laboratories and hospitals, also carries in the salary anticipating the worst scenarios. Boone is clear about the great threat to the recovery underway. “The greatest uncertainty is that a variant will be developed that is resistant to vaccines and, if necessary, has the potential to close sectors of the economy. That would be truly terrible. That is why everyone has to be vaccinated ”.
In recent days, markets have also targeted China, with real estate giant Evergrande on the brink of suffocation from a massive debt that it is not clear that it will be able to pay back. But while the media raises comparisons with the Lehman Brothers bankruptcy, the French leader sees the potential for contagion limited. “It will increase pressure on financial markets, but China has monetary and budgetary policy room to handle the situation and is poorly connected financially. It is something we are monitoring, but it is too early to draw conclusions ”.
The risk of self-fulfilling prophecy
In an unusual gesture, the OECD has also presented inflation outlooks in its latest report. “Everyone asks the question,” justifies Boone. Their analysis coincides with that of the central banks: the rise in prices is a transitory phenomenon. And it blames supply and demand problems: clogged production chains, collapsed ports, much more expensive containers, skyrocketing raw materials, foreign workers unable to cross borders, and an extraordinary increase in purchases by consumers who were unable to spend during confinement and have maintained their income, either by not having lost their job or by having received the public life preserver.
Boone expects inflation to deflate soon. “We think it will start to slow down next year. The risk is not zero, but we think that what we see today is temporary ”, he assures about the rise in prices. And he asks central banks to reinforce that message to prevent the buzz about rising cost of living from the beginning of a vicious cycle that culminates in a kind of self-fulfilling prophecy. “We would not like to see that the population, anticipating that inflation is going to be high, ask that their salary be raised to compensate, and that after that rise companies increase prices, and that when prices increase people say: Oh My God, prices keep rising, I have to ask for an even higher salary ”.