What is the economic outlook for OECD countries?

Transcription

1 The outlook What is the economic outlook for OECD countries? Paul van den Noord Counselor to the Chief Economist The outlook Real GDP growth, in per cent Japan Total OECD.... Brazil.... China India.... Indonesia.... Russian Federation.... South Africa.9... Source: OECD Economic Outlook 9 database.

2 World trade The outlook Growth outlook different across regions Annualised quarterly real GDP growth, in percent Japan Source: OECD Economic Outlook 9 database. Moderate pickup in world trade CPB indicator of world merchandise trade, = Source: CPB.

3 Unemployment World growth World growth sustained by emerging economies Contribution to annualised quarterly world real GDP growth, percentage points Non-OECD OECD Note: Calculated using moving nominal GDP weights, based on national GDP at purchasing power parities. Source: OECD Economic Outlook 9 database. Unemployment rates are diverging Unemployment rate, percentage of labour force Japan Source: OECD Economic Outlook 9 database.

4 Private consumption Business confidence Business confidence weak in euro area Purchasing Managers Index (PMI) for manufacturing and services Manufacturing Non Manufacturing Manufacturing Services 9 9 Note: Values greater than signify an improvement in economic activity. Source: Markit Economics Limited. Consumption has stagnated in euro area Private consumption volumes, index at cycle troughs 9:Q trough 99:Q trough 9:Q trough 9:Q trough 99:Q trough 9:Q trough Note: Private consumption volumes are indexed to in the quarter in which they reached the lowest level during the last three recessions. Zero on the horizontal axis corresponds to the quarter of these troughs. Source: OECD Economic Outlook 9 database.

5 Household deleveraging Lending indicators Lending to consumers is growing robustly in the Annualised monthly growth, in per cent Total US consumer loans bank loans to private sector Note: Annualised monthly rate of change of seasonally adjusted stocks, per cent. data are adjusted for the impact of securitisation. Last observation: March Source: Datastream and ECB. 9 Deleveraging has barely begun in the euro area - household debt is low Annualised quarterly real GDP growth, in percent Japan Note: Data for USA and Japan are not consolidated. For Q data are growth rates ( end of year to Q) of balance sheets published by US Federal Reserve, Bank of Japan, and ECB. is Germany, France and Italy. Source: OECD Annual National Accounts.

6 Monetary policy rates Inflation Underlying inflation to remain moderate.. Headline inflation, -quarter percentage change Japan Note: - PCE deflator refers to the deflator of personal consumption expenditures; - HICP to the harmonised index of consumer prices; Japan - CPI to the consumer price index. Source: OECD Economic Outlook 9 database. Monetary policy rates accommodative Policy interest rates, in percent.. Japan Source: Datastream.

7 ESP PRT GRC AUS ITA HUN SVN IRL POL SVK NLD FRA USA BEL GBR CZE NZL NOR ISL CAN AUT FIN SWE KOR ISR EST LUX JPN CHE DEU DNK Fiscal consolidation Central bank balance sheets Central bank balance sheets supportive Central bank liabilities, local currency (bn dollars) (bn euros) Japan ( bn yens) 9 Source: Federal Reserve; Bank of Japan; European Central Bank. Fiscal consolidation combine spending reductions and tax increases Change in the underlying primary balance -, in per cent of potential GDP Revenue side Spending side Total consolidation - - Note: Total consolidation is the projected difference in the underlying primary balance; revenue side is the projected increase in the underlying receipts excluding interest earned on financial assets; and spending side is the projected decline in the underlying primary spending excluding interest payments on debt. Source: OECD Economic Outlook 9 database; and OECD calculations.

8 rebalancing Cumulative change in domestic demand between 9 and (%) Government debt sustainability JPN GRC PRT USA ESP SVN GBR POL IRL SVK OECD AUS NZL FIN CZE NLD HUN FRA ITA CAN EA ISL LUX EST ISR BEL AUT SWE KOR DEU CHE DNK Government debt sustainability remains a long-term challenge Average increase in the underlying primary balance from to, in percentage points of GDP Debt stabilisation Debt ratio to % - - Note: See OECD Economic Outlook 9 for methodology. The bars show the average improvement in the underlying primary balance between and necessary to either stabilise government debt ratios or bring them down to % of GDP. In Japan s case, the average consolidation shown would be sufficient to stabilise the debt ratio but only after. Source: OECD Economic Outlook 9 long-term database. Rebalancing underway in euro area Changes in domestic demand and trade balances, 9- LUX FIN AUT BEL DEU FRA NLD SVK ITA - SVN - ESP IRL - PRT - GRC Change in merchandise trade balance between 9 and (% of GDP) Source: OECD Economic Outlook 9 database.

9 Fiscal impetus to reform Policy responsiveness Unit labour costs Unit labour costs have begun to adjust Unit labour cost, 999 = 9 GRC IRL ESP ITA PRT NLD FIN BEL FRA AUT DEU Source: OECD Economic Outlook 9 database. Fiscal sustainability concerns have given impetus to reform Overall responsiveness to Going for Growth priorities and fiscal consolidation effort.9 GRC DNK JPN NOR NZL SWE AUT FIN KOR USA NLD CAN CHE GBR CZE IRL HUN AUS ITA FRA. BEL LUX DEU ISL Fiscal variation - - Note: Horizontal axis: variation in the underlying primary balance as a percentage of potential GDP from to ; vertical axis: responsiveness rate to Going for Growth reform priorities, -. Correlation coefficient:.; statistically significant at the % confidence level. Source: OECD Quarterly National Accounts; OECD Main Economic Indicators; and OECD Economic Outlook 9 Database. POL ESP PRT 9

10 policy policy compact Firewall Has been strengthened Could be enhanced Fiscal compact Implementation, transparency, communication Growth Single Market can deliver (much) more EIB lending, infrastructure investment Jointly guaranteed bonds Redirect structural funds European Central Bank Balance sheet could be used more broadly Interest rate can be lowered 9