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OECD Team

1/26/2022

The OECD team presents its focus for 2022. You will find its economists throughout the year for in-depth analyses of the economic situation in France, the eurozone, Europe, the United States, etc. and on issues such as climate change.

TRANSCRIPT // OECD Team : January 2022

William De Vijlder: Amongst the economic developments in 2021, three have been particularly important and influence the outlook for 2022. One, the resilience of economic activity to the successive infection waves has increased. Two, heterogeneity is a key characteristic of the economic consequences of the pandemic, with significant differences between advanced and developing economies. Three, inflation has made a spectacular comeback, to a large degree due to the energy price shock and supply disruption, causing an intense debate on its transitory or lasting nature and what this entails for monetary policy.

 

OECD

Hélène Baudchon, Eurozone: In the eurozone, in 2022, the ECB’s monetary policy will remain in the spotlight given the upside risks to inflation. But the major debate, in our view, will be that on the reform of the fiscal rules in Europe. The aim is to define a new framework that is better respected and less complex. As we know, consensus will be difficult to find. Indeed, it will be necessary to reconcile credibility, flexibility and fiscal discipline, debt reduction and support to green and inclusive growth. Stakes are high and the challenge will be to avoid an anticlimax.

 

Stéphane Colliac, France: In France, this year, households’ purchasing power is the main topic, as inflation has significantly accelerated and should remain quite high during the first semester. As a result, this issue is one of the main topics of the Presidential election, with two questions: the first on the pace of wage growth, and the second on household consumption dynamics. Of course, this election should also be the occasion to renew with the reform agenda. The pension reform was interrupted two years ago and should resume.

 

Guillaume Derrien, Southern Europe: For Southern EU countries, apart from the challenge of cementing the economic recovery, we will be monitoring two key developments: first, a political one, with legislative elections in Portugal and the presidential elections in Italy, both scheduled at the end of January. Although this is not the most likely outcome, these elections could lead to a weakening of the coalitions in place, with possible repercussions on the progress of structural reforms, reforms which are demanded by the European Commission under the framework of the EU recovery funds. We will also keep an eye on the bond market, and a possible rise in sovereign interest rates linked to high inflation and the start of the ECB's monetary policy normalization.

 

Hélène Baudchon, Climate change : On the climate front, in 2022, we will be closely monitoring the following two advances in Europe: 1/ the European Commission’s definition of a green taxonomy (including gas and nuclear), which should be completed at the beginning of the year; and 2/ discussions on the adoption of a carbon tax border adjustment mechanism, which should be completed in the coming months. More globally, we will also have to pay close attention to the strengthening of the commitments of the parties expected at the COP27 to be held in Egypt in November. Indeed, this reinforcement is essential to safeguard the objective of limiting global warming to 1.5°C.

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