Covid-19 vaccines being developed in combination with ongoing financial stimulus program are key to improving global economic growth, the Organization for Economic Co-operation and Development (OECD) said in its latest Economic Outlook report.

According to the OECD, the global economy is improving despite the second wave of the Coronavirus pandemic in a number of countries as a result of the positive news about vaccine effectiveness and China’s strong economic recovery.

This gives the organisation grounds to improve its assessment of the global economic downturn this year to a 4.2% decrease set against a previous estimate in September of a 4.5% slump.

At the same time, however, the OECD has lowered its growth forecast for the global economy in 2021 from 5.0% to 4.2% in September, expecting a slowdown in growth to be 3.7% in 2022.

The report underscores the need to prevent inequalities created by the socio-economic impact of the pandemic, with the OECD suggesting that supportive monetary and fiscal policies should continue in order to accelerate the recovery of national economies.

“We are not out of danger yet. We are still in the midst of the pandemic crisis, which means that the policies underway have a lot more work to do,” OECD chief economist Laurence Boone told Reuters.

Overall, global gross domestic product will return to pre-crisis levels by the end of 2021, thanks also to a strong recovery in China, the OECD said.

“However, the overall forecasts blur large differences between individual Member States of the organization, as economic output in many economies is expected to remain around 5% below pre-crisis levels in 2022.

China will be the only OECD-covered country to see economic growth this year (GDP up by.18%), with expansion expected to pick up to 8% in 2021 before GDP growth slows to 4.9% in 2022.

At the same time, the OECD expects the US and Europe to contribute less to the global recovery compared to their weight in the global economy.

With US GDP likely to shrink by 3.7% this year, the US economy will grow by 3.2% in 2021 and 3.5% in 2022 if new fiscal stimulus measures are adopted. In September, the OECD forecast a contraction in US GDP of 3.8% this year and growth of 4% next year.

The Euro area’s gross domestic product will shrink by 7.5% this year, with the economies of a number of member states completing the year with the so-called “euro zone”. “double recession” (W-shaped recession) after re-imposition of anti-epidemic lockdowns. In 2021. the euro area economy will return to the path of growth, expanding by 3.6% and by 3.3% in 2022, the OECD predicts.