THE GLOBAL ECONOMIC OUTLOOK. Corinne Luu ECO/MPD 23 March 2017

Transcription

1 THE GLOBAL ECONOMIC OUTLOOK Corinne Luu ECO/MPD 23 March 2017

2 Global GDP growth to pick up modestly, boosted by fiscal initiatives Quarterly global growth Global GDP growth projections Note: Estimated fiscal initiatives contribution based on fiscal stimulus in China and the euro area for and in the United States for Source: OECD March 2017 Interim Economic Outlook; OECD November 2016 Economic Outlook database; and OECD calculations. 2

3 Growth dynamics mixed across major economies Real GDP growth Growth in the largest economies World United States Euro area Japan China India Brazil Moving nominal GDP weights using purchasing power parities. 2. Fiscal years starting in April for India. Source: OECD March 2017 Interim Economic Outlook; and OECD calculations. 3

4 Global industrial production has risen underpinning the recent growth pick up Global industrial production Year-over-year %, 3 month moving average Global manufacturing new orders Year-over-year % Index (3 month moving average) Source: Thomson Reuters; OECD, Main Economic Indicators database; Markit; and OECD calculations. 4

5 Global trade growth is set to improve but to remain weak relative to historical norms Global trade Year-over-year % Index Ratio of global trade to GDP growth Note: Merchandise trade only. Quarterly average of export orders Note: World trade volumes for goods plus services; global GDP at constant based on data available for 2017Q1. prices and market exchange rates. Light green represents forecast. Source: CPB Netherlands Bureau for Economic Analysis; Markit; OECD Economic Outlook 100 database; and OECD calculations. 5

6 Improved business sentiment contrasts with elevated uncertainty and soft investment Business confidence and global policy uncertainty Normalised index, Investment Pre-recession peak = 100 Note: LHS: Confidence index is a GDP PPP weighted average of individual OECD countries normalised confidence series. The 3 month moving average of the normalised PPP weighted global uncertainty index is shown. RHS: OECD shown. Current recovery shows since 2008Q1 including the forecasts in the dotted line. Previous 3 recoveries pre-recession peak in 1973Q4, 1980Q1 and 1990Q3. Investment is real total gross fixed capital formation. Source: PolicyUncertainty.com; OECD Main Economic Indicators database; OECD Economic Outlook 100 database and OECD calculations.

7 Consumption activity has trended up slightly since early 2016 Global consumption index Year-over-year % Global motor vehicle sales Year-over-year % Source: Thomson Reuters; OICA; OECD, Main Economic Indicators; and OECD calculations. 7

8 Headline inflation has risen along with the pick up in commodity prices Inflation in major economies Year-over-year % Commodity price developments Change since January 2016 (%) Note: Core inflation excludes food and energy. Personal consumption deflator used for the United States. Source: Thomson Reuters; OECD, Main Economic Indicators database; and OECD calculations. 8

9 Growth in the United States continues to be led by consumption Contributions to US GDP growth Quarter-over-quarter, annualised % Source: OECD March 2017 Interim Economic Outlook; OECD, Main Economic Indicators database; and OECD calculations. 9

10 Rebalancing of Chinese growth continues Contributions to China s GDP growth Nominal fixed investment Year-over-year % (cumulative level) Source: CEIC; OECD March 2017 Interim Economic Outlook; and OECD calculations. 10

11 The interest-rate cycle turned in mid-2016 with large increases in long rates globally United States Yield curves for government bonds Euro area Japan Source: ECB; and Thomson Reuters. 11

12 Financial vulnerabilities exist that could derail the expected growth pick up House prices are high in some markets House price-to-rent ratio Average since 1980 = 100 Non-performing loans % of gross loans Note: China includes special-mention loans. Source: OECD Analytical House Price database; BIS; China Banking Regulatory Commission; IMF; and OECD calculations. 12

13 Global trade has improved but rising protectionism would hurt GDP The effect of increased trade costs in the United States, China and Europe Difference from baseline Note: Effect of a rise in trade protection in the United States, China and European Union which raises trade costs by 10 percentage points for China, Europe and the United States against all trading partners, equivalent to an average increase in tariffs to 2001 levels, when trade negotiations under the Doha Development Round started. Source: OECD METRO model; OECD TiVA database; and OECD calculations. 13

14 Summary Global GDP growth anticipated to pick up GDP growth dynamics mixed across major economies and levels subdued relative to historical averages Sentiment robust, but consumption and investment softer Policy needs to strengthen growth and manage risks Monetary policy is overburdened; use fiscal initiatives together with structural reforms to support demand and increase supply Ensure robust early warning and effective resolution of non-performing loans Risks exist that could derail the modest recovery Increased trade protectionism would hurt growth Vulnerabilities associated with high house prices, under-priced credit risks, rising debt and non-performing loans Weaker fiscal contribution than expected would dampen the outlook 14

15 Additional Background 15

16 OECD Interim Economic Outlook projections Real GDP growth Year-on-year, % Interim EO projections Difference from November EO Interim EO projections Difference from November EO World United States Euro area Germany France Italy Japan Canada United Kingdom China India Brazil G Rest of the World Note: Difference in percentage points based on rounded figures. 1. Fiscal years starting in April. Source: OECD March 2017 Interim Economic Outlook; OECD November 2016 Economic Outlook database; and OECD calculations. 16