Household income in OECD countries rises in first quarter

Government support measures for households soften the economic impact of Covid-19, OECD says in a report

The UK, along with a number of other countries in the OECD group, rolled out stimulus packages to support their economies. Getty

The real household income per capita in some of the world's biggest economies marginally rose in the first quarter of 2020, propelled higher by government measures to soften the economic impact of the Covid-19 pandemic.

The 0.1 per cent uptick in household income per capita in countries included in the Organisation for Economic Cooperation and Development (OECD) came despite a 2 per cent fall in real gross domestic product in the OECD area.

“For the OECD area as a whole, real household income growth outpaced GDP growth by 2.1 percentage points, the largest positive gap between the two measures since the financial crisis (2008),” the Paris-basd OECD said in its latest report.

A number of countries in the 37-member group have rolled out stimulus packages to help their economies cope the pandemic. In March, the US announced a $2.3 trillion (Dh8.4tn) relief package to support families as well as businesses affected by the crisis. The UK also pushed out a  $39 billion stimulus package to support its economy.

However, among the seven major OECD economies, only the US recorded positive growth in real per capita household income, while the other six including Canada, France, Germany, Italy, the UK and Japan posted negative growth during the period.

Positive growth was also recorded in Australia (0.5 per cent), Belgium (0.7 per cent), Finland (1.2 per cent), Greece (0.8 per cent), Ireland (0.7 per cent), The Netherlands (1.6 per cent), Slovenia (1.5 per cent), and Sweden (1.3 per cent), according to the OECD data.

In the US, the positive growth is due to “more limited impact of Covid-19 and, in turn, more limited containment measures” in the first quarter of this year, the report said.

The world economy is set to slide into the deepest recession since the Great Depression, with the International Monetary Fund projecting a 4.9 per cent contraction this year and a sluggish recovery in 2021.

The US, the world’s largest economy, is expected to contract 8 per cent in 2020, while growth in Germany, Europe’s largest and the world’s fourth-biggest economy, will shrink 7.8 per cent, according to the IMF. The UK economy is expected to contract 10.2 per cent and Japan's 5.8 per cent.

“In Italy, and Germany, real household income per capita declined markedly in the first quarter of 2020, by 1.8 per cent and 1.2 per cent, respectively,” the report said.

The coronavirus outbreak has claimed more than 711,000 lives and infected more than 19 million people worldwide, according to Worldometers. More than 12 million people have recovered from the infection.