Your SlideShare is downloading. ×
OECD Economic Outlook - November 2013
OECD Economic Outlook - November 2013
OECD Economic Outlook - November 2013
OECD Economic Outlook - November 2013
OECD Economic Outlook - November 2013
OECD Economic Outlook - November 2013
OECD Economic Outlook - November 2013
OECD Economic Outlook - November 2013
OECD Economic Outlook - November 2013
OECD Economic Outlook - November 2013
OECD Economic Outlook - November 2013
OECD Economic Outlook - November 2013
OECD Economic Outlook - November 2013
OECD Economic Outlook - November 2013
OECD Economic Outlook - November 2013
OECD Economic Outlook - November 2013
OECD Economic Outlook - November 2013
OECD Economic Outlook - November 2013
OECD Economic Outlook - November 2013
OECD Economic Outlook - November 2013
OECD Economic Outlook - November 2013
OECD Economic Outlook - November 2013
OECD Economic Outlook - November 2013
OECD Economic Outlook - November 2013
OECD Economic Outlook - November 2013
OECD Economic Outlook - November 2013
OECD Economic Outlook - November 2013
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

OECD Economic Outlook - November 2013

91,450

Published on

The global economy is expected to continue expanding at a moderate pace over the coming two years, but policymakers must ensure that instability in financial markets and underlying fragility in major …

The global economy is expected to continue expanding at a moderate pace over the coming two years, but policymakers must ensure that instability in financial markets and underlying fragility in major economies are not allowed to derail growth, according to the OECD’s latest Economic Outlook.

Published in: Business, Technology
0 Comments
11 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
91,450
On Slideshare
0
From Embeds
0
Number of Embeds
53
Actions
Shares
0
Downloads
161
Comments
0
Likes
11
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. The Global Economic Outlook: Stronger growth ahead, but more risks Paris, 19th November 2013 11h00 Paris time Pier Carlo Padoan Deputy Secretary-General and Chief Economist
  • 2. OECD Economic Outlook: key messages 1. Global growth should pick up if major risks do not materialise. 2. Downside risks prevail. Negative spillovers from emerging economies could be stronger than before. 3. Emerging economies need to address vulnerabilities to improve resilience and tackle the slowdown in potential growth. 4. The United States should avoid fiscal brinkmanship. 5. In Japan, all three “arrows” of the government’s strategy should be implemented fully. 6. The euro area must repair the banking system and rebalance demand to reduce unemployment. 2
  • 3. Global growth should pick up if major risks do not materialise… Summary of growth projections World OECD Non-OECD United States Euro area Japan China World trade growth 2012 3.1 1.6 5.1 2.8 -0.6 1.9 7.7 3.0 2013 2.7 1.2 4.8 1.7 -0.4 1.8 7.7 3.0 2014 3.6 2.3 5.3 2.9 1.0 1.5 8.2 4.8 2015 3.9 2.7 5.4 3.4 1.6 1.0 7.5 5.9 Note: The upward (green) arrow means that the growth in the current year is higher than in the previous year. Real GDP growth and world trade growth (the arithmetic average of world merchandise import and export volumes) are seasonally and working-day adjusted annualised rates. Source: OECD Economic Outlook database 94. 3
  • 4. Growth prospects remain strongest in the emerging economies Projected change in real GDP in 2014-15 Annual average, per cent 8 8 7 7 1 6 BRIICS 6 5 Euro area countries 5 4 Other OECD member countries 4 3 3 2 2 1 1 0 0 -1 CHN IND MEX KOR ZAF USA POL AUS SWE CAN SVK BRA IRL HUN DNK FIN FRA ITA ESP NLD IDN CHL TUR ISR EST NZL NOR ISL RUS CHE GBR LUX AUT DEU CZE BEL JPN PRT GRC SVN -1 1. BRIICS countries comprise Brazil, China, India, Indonesia, Russia and South Africa. Source: OECD Economic Outlook database 94. 4
  • 5. … but the outlook is somewhat less positive than it appeared in May… Growth forecast almost unchanged for the OECD… … but significantly weaker for many emerging economies with the exception of China. Comparison of growth projections from May and November Economic Outlooks OECD 3 3 BRIICS1 8 May 2013 Outlook November 2013 Outlook May 2013 Outlook November 2013 Outlook 2 2 6 1 1 4 2011 2012 2013 2014 6 4 2011 2012 1. BRIICS countries comprise Brazil, China, India, Indonesia, Russia and South Africa. Source: OECD Economic Outlook database 93 & 94. 8 2013 2014 5
  • 6. … with forecast revisions varying across countries Change in 2014 real GDP growth projection between May and November Economic Outlooks Percentage points GBR GRC HUN LUX POL PRT FRA CHE NZL ITA JPN ESP MEX USA CAN ISL BEL IRL AUT BRIICS1 Euro area countries Other OECD member countries ISR DNK KOR NOR DEU IDN TUR CHL RUS BRA IND -2.0 -1.5 -1.0 -0.5 0.0 0.5 1. BRIICS countries comprise Brazil, China, India, Indonesia, Russia and South Africa. Source: OECD Economic Outlook database 93 & 94. 1.0 6
  • 7. The current recovery is still weak by past standards… OECD-wide real GDP, relative to pre-recession peak Per cent 20 15 1970s; Peak at 1974Q3 1990s; Peak at 1990Q4 1980s; Peak at 1981Q3 2000s; Peak at 2008Q1 20 15 10 10 5 5 0 0 -5 -5 Note: The point labelled “t” on the horizontal axis corresponds to the pre-recession peak quarter for each cycle. Source: OECD National Accounts database. 7
  • 8. … with a striking slowdown in world trade growth… World trade/GDP1 World trade volumes Per cent 2007 = 100 30 120 30 25 Trend (1990-2007) 120 25 20 20 100 15 15 10 10 80 100 80 1. Trade and GDP both in volume terms, in 2005 prices. Source: OECD National Accounts database, CPB World Trade Monitor. 8
  • 9. … which also reflects particular weakness in investment… OECD-wide fixed investment World FDI flows Volume, 2007 = 100 Index of USD values, 2007 = 100 105 105 120 120 100 100 100 100 95 95 80 80 90 90 60 60 85 85 40 40 80 80 20 20 75 75 0 0 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. 9
  • 10. … credit has lagged in the major economies… Bank loans to non-financial private sector 2007 = 100 110 110 105 105 100 100 95 95 90 90 85 Major OECD economies 80 85 Euro area United States Japan 80 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. 10
  • 11. … and which has resulted in stubbornly high unemployment, especially in Europe OECD-wide unemployment Unemployment rate 14 Per cent Millions of persons 14 55 12 12 50 50 10 10 45 45 8 8 40 40 6 6 35 35 4 4 30 30 25 25 20 20 2 0 United States Euro area Japan 2 0 55 Source: OECD national accounts database, OECD Economic Outlook 94 database, and Eurostat. 11
  • 12. Recent financial turbulence is one reason for the less positive outlook The fallout from the discussion of tapering of asset purchases by the Federal Reserve in May is the main negative development since the last Outlook • limited impact to date on major OECD economies • significant effects on some emerging economies Emerging market bond index1 May 1, 2013 = 100 105 100 105 Bernanke statement on tapering 100 95 95 90 90 85 80 1. JP Morgan EMBI+. Source: OECD Economic Outlook 94 database, Datastream. FOMC delays taper 85 80 12
  • 13. Emerging economies with large current account deficits were worst-hit Maximum rise in long-term yields from May 2013 Maximum increase in long-terminterest rates¹, in % pts 5.0 TUR 4.0 IDN BRA 3.0 ZAF MEX IND RUS 2.0 CHN 1.0 0.0 -8 -6 -4 -2 0 2 4 Current account balance last 4 quarters, in % of GDP 1. Based on daily information from April 30 to November 15, 2013. Note: Latest 4-quarter period is Q3 2012 – Q2 2013. Source: OECD Economic Outlook 94 database; Datastream; and IMF Balance of Payments database. 13
  • 14. Downside risks prevail. The recovery path is likely to be turbulent Significant risks remain from incomplete resolution of fiscal, financial and structural weaknesses since the crisis. Recent instability was a reminder of how risks can derail the central scenario for growth and employment. A tapering of US Federal Reserve asset purchases may bring a renewed bout of instability. Underlying fragilities in all the major economies could be exposed by the realisation of one or more prominent risks. 14
  • 15. 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 0.0 -0.5 -0.5 -1.0 -1.0 Percentage points 0.0 15 Source: OECD Economic Outlook 94 database; and OECD calculations.
  • 16. United States: exit from unconventional monetary policy will be challenging US monetary policy should remain accommodative, balancing uncertainty about the evolution of demand and employment with the costs of postponing exit. As growth strengthens, bond purchases should be wound down. When that process is complete, the Federal Reserve should start to raise policy interest rates towards a more neutral stance. 16
  • 17. ... as will dealing with the taper elsewhere In vulnerable EMEs, the US taper may aggravate policy dilemmas, with a reversal of capital inflows weakening activity. Where inflation is already high and the central bank’s credibility is in question, interest rates may have to be higher to anchor inflation expectations. US taper will also put upward pressure on interest rates in advanced countries, notably the euro area. This is another reason why strengthening bank balance sheets is an urgent priority. 17
  • 18. Addressing the risk of fiscal deadlock in the United States Polarised politics and the nominal debt ceiling create risks not only for the US but the whole world. The nominal debt ceiling should be abolished. Mechanistic and arbitrary short-term consolidation measures should be replaced by a coordinated medium-term plan. 18
  • 19. If the US debt ceiling were to bind, a new global recession could be triggered Change relative to baseline in first year if debt ceiling were to bind for one year -8 -6 Percentage points GDP growth -4 -2 Unemployment 0 0 1 2 3 United States United States Euro area Japan Euro area China Japan OECD China World Inflation -2.0 -1.5 -1.0 -0.5 0.0 United States Euro area Japan China OECD Note: Government consumption reduced by 5% of GDP in 2014. Term premium in long-term interest rates up by 200 b.p. in 2014 in the USA. Equity prices drop by 25% in 2014 in all countries. Short-term interest rates and nominal exchange rates held fixed. Source: OECD Economic Outlook 94 database, and OECD calculations. 19
  • 20. Japan’s fiscal challenges remain massive… Consolidation requirements to reduce government debt to 60 per cent of GDP by 20301 Percentage points of GDP 12 12 10 10 8 8 6 6 4 4 2 2 0 0 -2 -2 1. The average measure of consolidation is the difference between the underlying primary balance in 2014 and the average underlying primary balance between 2015 and 2030, except for those countries for which the debt target is only achieved after 2030, in which case the average is calculated up until the year that the debt target is achieved. Source: OECD calculations. 20
  • 21. … and must be tackled decisively The 2014 rise in the consumption tax is just the first step to putting public debt on a sustainable path. • The second planned increase, to 10% in 2015, should go ahead on schedule. • Any package to soften the growth impact of the tax increases should be focussed on one-time measures with high multipliers. • A detailed and credible plan to achieve the target of primary balance by 2020 is needed. • Structural reform to boost growth should be implemented quickly. 21
  • 22. Preventing another euro area crisis The recent ECB rate cut is welcome, but further easing may be required if deflation risks intensify. The Asset Quality Review and stress tests must be implemented rigorously – and followed up by bank recapitalisation where needed. Further progress must be made on establishing a fully fledged banking union with an adequate joint fiscal backstop. The date for an effective single bank resolution regime should be brought forward. 22
  • 23. Euro area countries hardest-hit by the crisis have made progress on structural reform… Responsiveness rates to Going for Growth recommendations, 2011-121 1.0 1.0 0.5 0.5 0.0 0.0 1. Responsiveness rates are calculated as the share of priority areas identified in Going for Growth 2011 in which 'significant' action was taken in 2011-12. The euro area and OECD rates are calculated as an unweighted average. Source: OECD Going for Growth 2013. 23
  • 24. …which is assisting with internal rebalancing… Contributions to improvement in net exports since 2007-081 In per cent of 2007-08 euro area GDP1 1.5 1.5 Fall in imports Rise in exports Change in net exports 1.0 1.0 0.5 0.5 0.0 0.0 -0.5 -0.5 Greece Ireland Italy Portugal Spain 1. The values shown are the changes between Q4 2007 – Q3 2008 and Q3 2012 – Q2 2013. Source: OECD Economic Outlook 94 database.
  • 25. … although that adjustment needs to be more symmetric Current account balance/GDP Per cent, 4-quarter moving average 10 10 5 5 0 0 -5 -5 -10 -10 -15 -15 -20 DEU GRC ITA PRT ESP -20 Source: OECD national accounts database. 25
  • 26. Summing up The global economy looks set to move beyond its post-crisis sluggishness, but there are still prominent downside risks. There is no room for complacency. Policy makers should avoid creating turbulence and stand ready to mitigate instability. Successful growth strategies require a strong commitment to structural reforms in advanced and emerging market economies alike. Policy priorities at the international level include trade, investment and financial reform. 26
  • 27. More information www.oecd.org/economy/economicoutlook.htm 27

×