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OECD’s recent analysis of the economic outlook in OECD and key emerging economies, as well as policy recommendations to spur growth, boost confidence and soften the impact of the jobs crisis. By Pier Carlo Padoan, Deputy Secretary-General and Chief Economist.
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Pier Carlo PadoanDeputy Secretary-General and
Chief Economist, OECD
International parliamentary
seminar. The global outlook
5 February, 2014
2
Growth prospects strongest in emerging economies, weakest in euro area.
Projected change in real GDP in 2014-15Annual average, per cent
1. BRIICS countries comprise Brazil, China, India, Indonesia, Russia and South Africa.
Source: OECD Economic Outlook database 94.
IDN
CHL
TUR
ISR
EST
NZL
NOR
ISL
RUS
CHE
GBR
LUX
AUT
DEU
CZE
BEL
JPN
PRT
GRC
SVN
IDN
CHL
TUR
ISR
EST
NZL
NOR
ISL
RUS
CHE
GBR
LUX
AUT
DEU
CZE
BEL
JPN
PRT
GRC
SVN-1
0
1
2
3
4
5
6
7
8
-1
0
1
2
3
4
5
6
7
8
BRIICS1
Euro area countries
Other OECD member countries
3
The current recovery is still weak by past standards…
Note: The point labelled “t” on the horizontal axis corresponds to the pre-recession peak quarter for each cycle.
Source: OECD National Accounts database.
OECD-wide real GDP, relative to pre-recession peakPer cent
-5
0
5
10
15
20
-5
0
5
10
15
201970s; Peak at 1974Q3 1980s; Peak at 1981Q31990s; Peak at 1990Q4 2000s; Peak at 2008Q1
4
Trade slower than in the past
Will investment pick up?
Credit still lagging in EA
Unemployment remains elevated
EME slower, more vulnerable
Drivers of growth?
5
A striking slowdown in world trade growth…
1. Trade and GDP both in volume terms, in 2005 prices.
Source: OECD National Accounts database, CPB World Trade Monitor.
World trade/GDP1
Per centWorld trade volumes
2007 = 100
1990
1991
1993
1995
1997
1998
2000
2002
2004
2005
2007
2009
2011
2012
10
15
20
25
30
10
15
20
25
30
2005
2006
2007
2008
2009
2010
2011
2012
2013
80
100
120
80
100
120
6
Weakness in investment…
OECD-wide fixed investmentVolume, 2007 = 100
Note: Fixed investment values are the weighted average of OECD member countries, where the weights are GDP measured at 2005 PPP USD.
Source: OECD Economic Outlook 94 database, OECD Foreign Direct Investment (FDI) Statistics.
World FDI flowsIndex of USD values, 2007 = 100
2004
2005
2006
2007
2008
2009
2010
2011
2012
75
80
85
90
95
100
105
75
80
85
90
95
100
105
2004
2005
2006
2007
2008
2009
2010
2011
2012
0
20
40
60
80
100
120
0
20
40
60
80
100
120
7
Credit lagging in the major economies…
Bank loans to non-financial private sector2007 = 100
80
85
90
95
100
105
110
Euro area United States Japan
Note: Major OECD economies is calculated as the weighted average of the indices (2007 = 100) of nominal bank credit to the non-financial private sector for the United States, the euro area and Japan, where the weights are GDP in 2007 measured at USD PPP.
Source: Datastream and European Central Bank.
80
85
90
95
100
105
110
Major OECD economies
8
… stubbornly high unemployment, especially in Europe
Unemployment ratePer cent
Source: OECD national accounts database, OECD Economic Outlook 94 database, and Eurostat.
2008
2009
2010
2011
2012
2013
0
2
4
6
8
10
12
14
0
2
4
6
8
10
12
14
United States Euro area Japan
OECD-wide unemploymentMillions of persons
2008
2008
2009
2009
2010
2010
2011
2011
2012
2012
2013
20
25
30
35
40
45
50
55
20
25
30
35
40
45
50
55
9
Most EMEs are now expected to see
cyclical upturns…
…but rapid credit growth is a source of vulnerability in some
Will EMEs return to strong growth?
10
China is still growing strongly…
…but high public debt in some regions
is a concern
Will EMEs return to strong growth?
11
Negative spillovers from emerging economies could be stronger than before
A deeper slowdown in EMEs would have negative feedback effects on advanced economies.
Some advanced economies have tight trade and financial links with EMEs, and would be significantly affected.
First-year impact on growth of a 2% decline in domestic demand in non-OECD countries excluding China
Source: OECD Economic Outlook 94 database; and OECD calculations.
USA
OECD
Euro
area JP
N
-1.0
-0.5
0.0
-1.0
-0.5
0.0
12
Exposure to EME could hit banks
Banks' foreign claims on emerging market economies¹Consolidated claims on an ultimate risk basis²
Source: OECD Economic Outlook 94 database; BIS; National sources; and OECD calculations..
ESPGBR
NLD
CHE
GRCAUT
PRT
Euro
area
FRASW
EDEU
ITA
JPN
BELAUS
USA0
5
10
15
20
25
30
35
40
0
5
10
15
20
25
30
35
40
Banks' foreign claims in % of GDP
Banks' foreign claims in % of financial assets
13
Bond yields have recently converged
somewhat…
…and bank lending rates are edging
down in most countries
Has the euro area crisis ended?
14
Most deficit countries have reduced their relative unit labour
costs since 2008
… but some of the periphery countries are
in deflation or very close to it
Has the euro area crisis ended?
15
EA countries have made progress on structural reform…
Responsiveness to Going for Growth recommendations, 2011-12Adjusted for the difficulty of undertaking reform¹
1. The adjusted responsiveness rate is calculated as the share of recommendations in Going for Growth 2011 for which 'significant' action has been taken, where each recommendation is weighted by the inverse of average responsiveness to priorities in this area in non-crisis circumstances, in order to reflect the fact that some areas of reform are more difficult than others. The euro area and OECD rates are calculated as an unweighted average; the OECD rate is not adjusted.
Source: OECD Going for Growth 2013.
GRC IRL PRT ESP ITA Euro area
OECD0.0
0.5
1.0
0.0
0.5
1.0
16
Although adjustment must be more symmetric
Current account balance/GDPPer cent, 4-quarter moving average
Source: OECD National Accounts database.
2007
2008
2009
2010
2011
2012
2013
-20
-15
-10
-5
0
5
10
-20
-15
-10
-5
0
5
10
DEU GRC ITA PRT ESP
17
Investment is weak by past standards in most countries
Export performance in the periphery has improved, but
much of the post-crisis adjustment has come through
import compression
Will growth in the euro area be sustained?
