OECD Economic Outlook

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The OECD Economic Outlook is the OECD’s twice-yearly analysis of the major economic trends and prospects for the next two years. Prepared by the OECD Economics Department, the Outlook puts forward a consistent set of projections for output, employment, government spending, prices and current balances based on a review of each member country and of the induced effect on each of them on international developments.

Coverage is provided for all OECD member countries as well as for selected non-member countries. Each issue includes a general assessment, chapters summarizing developments and providing projections for each individual country, three to five chapters on topics of current interest such as housing, and an extensive statistical annex with a wide variety of variables including general debt.
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OECD Economic Outlook, Volume 2013 Issue 1

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20 June 2013
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The OECD Economic Outlook is the OECD’s twice-yearly analysis of the major economic trends and prospects for the next two years. The Outlook puts forward a consistent set of projections for output, employment, prices, fiscal and current account balances.

Coverage is provided for all OECD member countries as well as for selected non-member countries. This issue includes a general assessment, chapters summarising developments and providing projections for each individual country, a special chapter on growth prospects and fiscal requirements over the long term, and a statistical annex.


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  • Editorial: Multiple paths to recovery

    While still disappointing, the global economy is moving forward, and it is doing so at multiple speeds. These multiple speeds reflect different paths towards self-sustained growth, with each path carrying its own mix of risks.

  • General Assessment of the Macroeconomic Situation

    In the absence of adverse events, growth in advanced economies should strengthen gradually after the middle of 2013 and through 2014, helped by on-going support from accommodative monetary policies, improving financial market conditions and a gradual restoration of confidence.

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  • Expand / Collapse Hide / Show all Abstracts Developments in individual OECD countries

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    • United States

      Economic growth is expected to remain moderate in 2013, and then pick up noticeably in 2014 as the labour market recovery gains momentum. Tax increases are taking a significant bite out of incomes this year, but sizable gains in equity and real estate prices have boosted household wealth and should provide support to private consumption and residential investment. Given ample corporate cash flow and an improved demand outlook, business investment is likely to rise steadily over the projection.

    • Japan

      Japan has rebounded strongly from its 2012 recession, led by fiscal and monetary policy stimulus. A fiscal package introduced in early 2013 and a new monetary policy framework aimed at achieving the 2% inflation target, accompanied by a weakening yen, are boosting output and confidence. Aided by a recovery in world trade, output growth is projected to be close to 1½ per cent in 2013 and 2014, which will help to push inflation into positive territory.

    • Euro Area

      Activity is still falling, reflecting ongoing fiscal consolidation, weak confidence and tight credit conditions, especially in the periphery. Growth is projected to pick up only slowly during the second half of 2013 as the pace of fiscal consolidation slows down and private demand strengthens on the back of improving confidence and declining financial market fragmentation. High unemployment and excess capacity will depress inflationary pressures.

    • Germany

      After decelerating throughout 2012 and turning negative in the fourth quarter, GDP growth is expected to strengthen gradually during 2013 and reach 2% in 2014. While subdued activity in the euro area will hold back the recovery, the pick up of world trade is projected to increase export growth. Wage and employment gains as well as low interest rates will support domestic demand, narrowing the current account surplus to 6% of GDP. The unemployment rate is expected to fall somewhat further, while consumer price inflation may rise to 2% in 2014.

    • France

      Economic activity has been more or less stagnant over the last two years and is likely to pick up only slowly in 2014. Real GDP growth is projected to be slightly negative in 2013 and to reach 0.8% in 2014. The unemployment rate would therefore continue to increase until the end of 2014. Despite VAT hikes, headline inflation should recede towards 1% or less.

    • Italy

      Italy’s recession will continue throughout 2013 as the effects of fiscal tightening and restrictive credit conditions bear down on economic activity. Employment and hours worked will continue to fall, constraining household budgets and consumption spending. Despite recapitalisation, continuing losses hinder the banking sector from supporting investment and consumption, though some relief will come from the government’s settlement of its payment arrears. Notwithstanding strengthening exports and less fiscal consolidation, growth will remain low in 2014.

    • United Kingdom

      Continuing weakness of euro area trading partners, slow real income growth and necessary public and private sector deleveraging are generating strong headwinds for the economy. Growth is expected to pick up gradually through 2013 and 2014 as gross fixed investment and exports gain momentum. Inflation expectations are above the inflation target, but inflation is projected to decelerate owing to persistent economic slack.

    • Canada

      Economic growth is projected to strengthen through 2013 and 2014, driven by business investment, which will benefit from low capital costs, still high commodity prices and improving confidence. External demand will also contribute, thanks to expanding US and non-OECD markets and a depreciating exchange rate (since autumn 2012). Household spending will be supported by easy monetary policy yet restrained by tightening mortgage rules and deleveraging. A consolidating public sector will slow growth as well.

    • Australia

      GDP growth is likely to slow temporarily to 2½ per cent in 2013, before picking up to around 3¼ per cent in 2014. The expected weakening of the boom in mining investment will be only gradually offset by the sector’s increasing export capacity and the strengthening of the non-mining sector. The persisting high exchange rate and still fragile confidence are inhibiting the emergence of new drivers of growth.

    • Austria

      Economic activity has stabilised after contracting slightly in the last quarter of 2012. Export-market growth is set to pick up. This should improve confidence which, together with an increase in real incomes and generally favourable financing conditions, is projected to support a gradual recovery of domestic demand. Growth is projected to reach 0.5% in 2013 and 1.7% in 2014.

    • Belgium

      Recovery is slowly gathering pace, driven by stronger world trade and supportive monetary conditions. Domestic demand will pick up only gradually, owing to weak real income growth, low capacity utilisation, necessary fiscal consolidation and a weak housing market. Only in the second half of 2014 will growth return to potential and unemployment stop rising. Inflation will further ease over the projection period.

    • Chile

      Notwithstanding sluggish global growth and disappointing developments in trading partner countries, the economy has performed well recently, supported primarily by strong domestic demand. Activity is projected to slow in the near term as business confidence and investment moderate. Growth is projected to return to a faster pace later in the year, as trading partners’ growth increases and global financial conditions improve, with further momentum likely to be gained in 2014.

    • Czech Republic

      The economy is expected to pick up from mid-2013 onwards, as exports recover slowly from the negative impact of the euro crisis and improving business and consumer confidence support domestic demand. Needed fiscal consolidation is weighing on domestic demand. Growth is projected to be too low to prevent a further widening of the output gap, implying continued weak inflation.

    • Denmark

      Growth is expected to recover gradually following a weak 2012, thanks to the effects of past fiscal stimulus, low interest rates and improving confidence. Exports will also pick up as world trade regains strength and competitiveness improves.

    • Estonia

      Growth is projected to regain momentum, driven by private domestic demand. Rising capacity utilisation and falling unemployment are improving confidence and generating expectations of further wage and employment growth. Changes in headline inflation are mainly driven by energy and food prices while the medium-term trend is determined by price convergence in the non-tradable sector.

    • Finland

      Activity has contracted, with low capacity utilisation and uncertainty about future demand depressing business investment, and rising unemployment and recent tax increases weakening consumption. Exports are being held back by the euro area recession and eroding competitiveness. Unemployment is edging up and will stabilise only in 2014 as the international environment brightens.

    • Greece

      Ongoing fiscal adjustment, declining real wages and weak exports are deepening the recession. Unemployment has reached historical highs, increasing social strains. Despite improving confidence over recent months, positive growth is expected only in the course of 2014 as export demand strengthens, competitiveness improves further and investment returns. Sluggish product market reforms are blunting the effects of lower wages on price competitiveness.

    • Hungary

      After contracting through 2012, the economy is expected to start expanding at a subdued pace in the course of 2013. Partly due to a rising participation rate, unemployment is projected to increase until mid-2014. As deleveraging, high uncertainty and poor business confidence will continue to weigh on private domestic demand, growth will hinge on exports and the current account surplus should widen further. Though moderated by economic slack, core inflation is projected to remain somewhat above 3% over the projection horizon as inflation expectations remain entrenched at a high level.

    • Iceland

      Economic growth is projected to be moderate in 2013 but to increase to around 2½ per cent next year, provided that a large planned increase in energy-intensive investment takes place. Unemployment should fall to slightly below the structural rate of around 5% by 2014. Following monetary policy tightening and recent exchange rate appreciation, inflation is set to fall too, but to remain above target.

    • Ireland

      The moderate recovery and gradual economic rebalancing is projected to continue. Exports will remain the main driver of growth, making Ireland’s outlook largely dependent on developments in trading partners. Domestic demand is projected to gradually strengthen. Business investment should pick up as multinational enterprises continue to build up their production facilities. The unemployment rate is expected to decline only slightly, reflecting the slow recovery in labour-intensive domestic sectors and persistent skill mismatches. On the assumption of full policy implementation, the fiscal deficit should continue to decline through the projection period.

    • Israel

      Growth has continued to slow, but GDP is being boosted by new offshore natural gas production. External demand will underpin activity in 2014, but the contractionary effects of a sharp fiscal consolidation will be substantial. Inflation is currently low, but price pressures may develop over the projection period in the light of relatively tight labour and product markets.

    • Korea

      The economy slowed in 2012 as weak export growth reduced business investment. A pick-up in world trade is projected to spark a gradual recovery, with output growth reaching 4% in 2014, despite continued headwinds from the high level of household debt. The expansion is expected to narrow Korea's large current account surplus and lift inflation into the central bank's target zone.

    • Luxembourg

      Economic activity will continue to be subdued in 2013 due to weak demand from neighbouring countries, low confidence, rising unemployment and fiscal consolidation. Growth will pick up in 2014, along with the recovery in the euro area. Core inflation will decline only slowly and remain above the euro area average, reflecting the backward-looking wage indexation mechanism.

    • Mexico

      The economy expanded at a strong pace in 2012, but some delayed effects from the recent weakness in the US economy will be felt in the first half of 2013. As financial conditions continue to improve and the US recovery strengthens, growth is projected to firm up going into 2014.

    • Netherlands

      The economy has been in recession since mid-2012, but growth is projected to pick up by end-2013. Exports and, in turn, a gradual improvement in business investment will be the main drivers of the recovery. Ongoing fiscal consolidation and household deleveraging will hold back activity and growth will be too weak to prevent a further rise in the unemployment rate. Inflation is expected to fall after a VAT-related spike in early 2013.

    • New Zealand

      The economy is picking up, fuelled by strengthening domestic demand, including post-earthquake reconstruction. Growth in 2013 and 2014 should be bolstered by residential and business investment but may be tempered by the strong exchange rate, fiscal consolidation and, in 2013, temporary drought effects. Firming housing markets and gradually rising employment will support household spending growth. Inflation is projected to remain within the target range over the projection but will rise from low levels as earthquake rebuilding absorbs excess capacity.

    • Norway

      The economy is projected to expand robustly in 2013 and 2014. Domestic demand will be supported particularly by investment in the petroleum industry and housing, but non-oil exports will remain weak. Strong demand for labour keeps unemployment low and wage growth high. Reflecting exchange rate appreciation and stable import prices, inflation has remained below the central bank’s target, though it is projected to rise through 2014.

    • Poland

      Following a sharp slowdown in 2012, GDP growth is projected to pick up as investment and exports recover. Yet overall economic slack, and joblessness in particular, will continue to increase, holding inflation down to around 1% in 2014. The current account deficit is projected to edge down to below 3% of GDP in 2014.

    • Portugal

      Against the background of ongoing fiscal consolidation and weak external demand, the economy is projected to contract throughout 2013 and the unemployment rate to reach historical highs of more than 18%. As global conditions improve and domestic demand recovers, growth is expected to resume slowly. Inflation will remain very low over the projection horizon. The current account deficit will close in 2014, reflecting improvements in competitiveness, but also very weak domestic demand.

    • Slovak Republic

      The economy is suffering from the difficult external environment and fiscal consolidation is weighing on domestic demand. While exports will progressively pick up through 2013, reflecting stronger world trade and the gradual recovery in the euro area, private consumption will remain subdued due to rising unemployment, low wage growth and continued fiscal consolidation, which is designed to exit the Excessive Deficit Procedure and prevent government debt from breaking through the constitutional limit.

    • Slovenia

      Economic activity is expected to decline further in 2013 as problems in the banking sector, corporate debt overhang, a weak labour market and fiscal consolidation weigh on domestic demand. Better growth in export markets is projected to spur a weak recovery in 2014. Unemployment will rise further and, reflecting large and growing economic slack, inflation will remain subdued.

    • Spain

      The recession in Spain is projected to continue in 2013 as fiscal consolidation and high private sector indebtedness undermine domestic demand. Trading partner growth and cost competitiveness gains, along with improved financial conditions as interest rate spreads gradually go down, will help to spur a slow recovery in 2014. The unemployment rate is projected to rise to over 28% before stabilising. Inflation and wage pressures will remain subdued. Due to substantial consolidation efforts, the fiscal deficit is expected to continue to fall.

    • Sweden

      The economy continued to lose momentum through 2012, but there are signs of a moderate recovery. Growth is expected to strengthen gradually as world trade picks up and confidence improves. With rising labour force participation, any fall in the unemployment rate is likely to be somewhat delayed. Ample spare capacity will keep core inflation subdued.

    • Switzerland

      Despite persistent weakness in the euro area, Swiss economic growth seems set to increase moderately as demand from emerging markets rises and consumer spending remains solid. However, projected activity will not be sufficient to bring the unemployment rate down. Completion of the absorption of the exchange rate appreciation is projected to allow the economy to exit deflation early next year.

    • Turkey

      Following weak growth in 2012, as consumption and investment contracted and offset a surge in exports, the economy is now regaining momentum. Growth is projected to rise to above 3% in 2013 and, as the global recovery gathers strength, to pick up to 4½ per cent in 2014. Inflation and the current account deficit both remain above comfort levels, however.

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    • Brazil

      Since end-2011, monetary and fiscal stimuli have supported a gradual recovery, although short-term indicators point to significant uncertainties. The unemployment rate remains at record-low levels. After several years inside the tolerance band, inflation has crossed 6.5%, which is the upper limit of the target tolerance band to be met at year-end, and inflation expectations for 2013 and 2014 remain above the inflation target of 4.5% (the mid-point of the band). Portfolio capital inflows have receded and macroprudential measures that had been put in place to manage them have been relaxed.

    • China

      After showing signs of recovery in late 2012, growth unexpectedly weakened in the first quarter of 2013. The slowdown came mainly from capital formation, in particular from a swing in stock-building. Inflation has been declining but stabilised in early 2013. Given the strong growth in credit and more supportive fiscal policy, some turnaround in output growth can be expected by mid-2013. Nonetheless, growth for 2013 as a whole is projected to be subpar for the second consecutive year. In 2014, faster world trade may also boost the economy, bringing growth to 8.4%. With more limited export market share gains than in the past, the current account surplus may shrink anew.

    • India

      Growth was at its weakest in a decade in 2012, reflecting both subdued external and domestic demand, including from fiscal tightening. Growth should gradually recover in 2013 as efforts to speed up the approval of large investment projects and the partial deregulation of foreign direct investment take effect. Headline inflation has remained stubbornly high, but inflation is expected to decline further as the effects of poor weather on food prices and hikes in administered prices fade.

    • Indonesia

      Economic growth has been robust and is expected to remain so through the projection period, sustained by strong household and business sector demand. Headline inflation has been high in recent quarters due to increases in the administered price of electricity and rice, and recent restrictions on certain food imports. It may well rise sharply, albeit temporarily, in the near future if the government succeeds in raising the price of subsidised fuel.

    • Russian Federation

      Growth is projected to strengthen as a moderate recovery in the euro area improves the outlook for energy exports and domestic demand accelerates due to increasing real incomes. Inflation surged as administrative and food prices increased but will gradually decline towards the policy target range of 5‑6% as this effect fades. The current account surplus will continue to diminish.

    • South Africa

      Faster growth is expected on the back of a weaker rand and a pick-up in world trade. Domestic demand is being held back by low consumer confidence and weak real income growth. As accelerating exports feed into the domestic economy, growth should become stronger and reach potential towards the end of 2014. Higher exports are projected to narrow the current account deficit. Inflation has risen but is projected to be contained by the large degree of slack in the economy.

    • Growth Prospects and Fiscal Requirements over the Long Term

      Growth of the present non-OECD will continue to outpace that of the present OECD, but the difference will narrow substantially over coming decades. From over 7% per year recently, non-OECD growth may decline to around 4½ per cent per annum in 2030. Until around 2020, China is set to have the highest growth rate among major countries, but could be then surpassed by India.

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  • Statistical Annex

    This annex contains data on key economic series which provide a background to the recent economic developments in the OECD area described in the main body of this report. Data for 2012 to 2014 are OECD estimates and projections. The data in some of the tables have been adjusted to conform to internationally agreed concepts and definitions in order to make them more comparable across countries, as well as consistent with historical data shown in other OECD publications. Regional aggregates are based on weights that change each period, with the weights depending on the series considered. For details on aggregation, see OECD Economic Outlook Sources and Methods.

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