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This Interim Report updates projections made in the November 2013 issue of OECD Economic Outlook.
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11 March 2014
Recent economic developments and the near-term outlook
Rintaro TamakiDeputy Secretary-General and Acting Chief Economist, OECD
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1. Recent developments and near-term
outlook
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Recent PMIs for the major economies have
mostly been strong.
Consensus forecasts for 2014 have risen in recent months, except for Japan.
Ongoing recovery in advanced economies…
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… with the OECD’s Composite Leading Indicators pointing to an upswing…
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Advanced economy activity is still being supported by easy financial
conditions
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Trade volumes have risen more rapidly in recent months
With the recovery of advanced economies, world trade growth has
picked up
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Recent developments in the United States have been affected by unusual
weatherSevere winter weather appears to have dented the growth of output…
… and employment.
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As expected, activity appears to be surging ahead of 1 April, with a dip foreseen
afterward.
The consumption tax hike will make Japan’s near-term growth profile
uneven
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Euro area unemployment is still near its highs.
Inflation has fallen further below target in the euro
area.
Albeit improving, the euro area is still lagging other major advanced
economies
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OECD interim short-term projections
Indicator-based forecasts for GDP in the major economies1
Annualised quarter-on-quarter growth, in per cent2
b 2013Q3 2013Q4 2014Q1 2014Q2United States 4.1 2.4 1.7 [3.1]*Japan 0.9 0.7 4.8 [-2.9]*Germany 1.3 1.5 3.7 2.5France -0.2 1.2 0.7 1.0Italy -0.1 0.5 0.7 0.1United Kingdom 3.4 2.9 3.3 3.3Canada 2.7 2.9 0.5 [2.4]*
G7 2.8 2.0 2.2 2.0Euro area 32 0.5 1.2 1.9 1.4
Source: OECD Interim Projections.
1. All numbers based on OECD indicator model, except for the United States, Japan and Canada, where the numbers for 2014 Q2 are from the November 2013 Economic Outlook , owing to one-off factors that cannot be captured by the model.
3. Weighted average of Germany, France and Italy.
2. Based on GDP releases and high-frequency indicators published by 10 March; seasonally and in some cases working-day adjusted.
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Trend growth has slowed in emerging economies…
Economic Outlook online database
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… and tighter financial conditions may compound that with a cyclical
slowdown…Bouts of financial market turmoil like the one affecting many EMEs in
January may depress near-term growth in some cases.
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… and could complicate the recovery for advanced economies
Economic Outlook online database
16
The dip in momentum in the United States could turn out to be less transitory than
expected
Home sales have declined as long-term interest rates
have risen.Business confidence has
turned down.
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Priorities to support demand and reduce fiscal risks in advanced
economies• Gradually withdraw monetary accommodation, with
careful communication.• Improve the quality of fiscal consolidation while its
pace slows.USA
• Maintain or increase monetary stimulus. • Ensure that the review of the banking system is
credible and followed up.• Adhere to the programmed pace of structural fiscal
consolidation.
Euro area
• Meet or exceed the targeted quantitative and qualitative easing.
• Pursue steadfast fiscal consolidation.• Strengthen structural reform efforts (the “third
arrow” of Abenomics).
Japan
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Priorities for EMEs to manage weaker demand and greater risk
aversion• Steadily restrain credit growth.• Improve financial and macro-prudential regulation.• Enhance monitoring and control of local
government spending.• Implement the wide-ranging reforms announced in
November.
China
• Provide for sufficient exchange rate flexibility.• Address inflation pressures where necessary.• Relax fiscal policy only where sufficient scope exists.
Other
EMEs
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Most countries have considerable scope to step up growth-friendly structural
reforms
Source: OECD calculations based on Going for Growth 2014.
Responsiveness to Going for Growth recommendations
Note: Responsiveness rates are calculated as the share of priority areas in Going for Growth in which 'significant' action has been taken. The euro area and OECD rates are calculated as an unweighted averages. OECD countries are shaded in blue, non-OECD countries are in yellow, and the OECD average is in red.
Responsiveness rate, 2012-2013
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
IDN
NO
RISLCH
ER
US
BELCH
LN
LDTU
RU
SALU
XK
OR
SWE
POL
JPNAU
SAU
TH
UN
FRA
ITACZED
EUO
ECDISRCANSVNCH
NZA
FD
NK
FINBR
AIN
DSVKG
BRM
EXPR
TESTN
ZLESPIR
LG
RC
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Improved momentum in major advanced economies
Slowing growth exacerbated by tighter financial conditions in emerging economies
Growing importance of structural reforms in both advanced and emerging economies
Key messages
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Additional reading
Economic OutlookEconomic policy reforms: Going for GrowthEconomic Outlook online databaseMain economic indicators Economic’s department policy notesEconomic’s department working papersOECD forecasts during and after the financial crisis: a post mortem
