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 2014 Issue 2

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25 Nov 2014
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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.

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  • Editorial: Shifting into Higher Gear and Rebuilding the Engines of Growth

    Overall, the global economy continues to run in low gear. At 3% over the past 7 years, the pace of global growth is more than 1 percentage point below the 2000-07 period, and about ¾ of a percentage point below the average of the 15 years prior to the financial crisis. Global trade growth also remains below trend. Around the world, private business investment is still just idling along. Eleven million more people remain unemployed in the OECD area alone, compared to 2007.

  • General Assessment of the Macroeconomic Situation

    Growth is projected to remain modest by past norms, and unemployment is set to stay much above pre‑crisis levels in many economies. Prospects for moderate improvements differ across both advanced and emerging economies.

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  • Expand / Collapse Hide / Show all Abstracts Developments in Individual OECD Countries and Selected Non-Member Economies

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    • Australia

      Output growth is projected to dip to 2½ per cent in 2015 but recover to 3% in 2016. Declining business investment will be countered by gathering momentum in consumption and exports. Growth at the projected pace will be enough to lower the unemployment rate, although consumer price inflation will remain moderate due to economic slack.

    • Austria

      Economic growth remains subdued due to weak external demand and declining domestic confidence. Solid fundamentals, favourable financial conditions and a gradual improvement of the external environment should nevertheless allow the economy to recover steadily in 2015 and 2016. Unemployment, though high for national standards, remains among the lowest in the European Union. Inflation is projected to stay above the euro area average.

    • Belgium

      The pick-up in domestic demand, driven by household consumption and business investment, should continue to spur economic activity, with further support coming from the gradual firming of export growth. However, prospects remain fragile due to low confidence, weak competitiveness and fiscal consolidation. The unemployment rate is projected to fall slowly. Inflation will pick up in the course of 2015, but will remain modest due to limited imported price pressures.

    • Brazil

      After real GDP declines in the first half of 2014, activity is set to recover gradually. Nonetheless, growth will remain modest due to tighter monetary and fiscal policies, weak external demand, low levels of investment and persistent infrastructure bottlenecks. Inflation will only come down slowly, as overdue increases in administered prices are likely to push up inflation temporarily.

    • Canada

      Building on recent solid growth, real GDP is projected to accelerate through 2015, driven by rising exports and business investment. Exports will be supported by stronger foreign-market growth and recent currency depreciation. Business investment should strengthen with improved demand, to boost capacity and cost competitiveness. Activity should slow somewhat in 2016 as higher interest rates begin to bite, consumption growth slows to reduce household indebtedness and housing investment eases. With economic slack fully absorbed, inflation is projected to return to 2% after falling temporarily in 2015.

    • Chile

      Chile’s rapid economic growth has slowed sharply since mid-2013 and is projected to pick up only modestly in the near term. Declining copper prices and lower demand from China have reduced the terms of trade, business confidence and investment. A moderate recovery is expected in 2015 and 2016, driven by supportive monetary policy, expansionary fiscal policy and stronger external demand.

    • China

      Growth has declined somewhat in 2014 amidst the on-going property market correction and the resulting weak demand in upstream industries. The authorities have adopted a series of measures to support growth, and investment in infrastructure and social housing is expected to accelerate to meet urbanisation needs. Growth is projected to continue to edge down in the next two years, to around 7%. The current account surplus is set to widen somewhat to about 2¾ per cent of GDP.

    • Colombia

      Economic growth has been solid but is projected to moderate in 2015, as lower export prices reduce investment and export growth, and private consumption slows due to tighter credit conditions. In 2016, growth will pick up again as infrastructure investment accelerates and external demand gains momentum. Inflation will remain stable around its target as there is no significant build-up of excess demand pressures, while unemployment will stabilise at around 9½ per cent.

    • Czech Republic

      The recovery is becoming more balanced as supportive financial conditions, government spending, rising confidence and stronger incomes are strengthening domestic demand in 2014 and 2015. The strength of domestic demand is offsetting the headwinds to exports from near-term weakness in export markets. As exports also recover, economic slack will diminish and push inflation to 2% by 2016.

    • Denmark

      Economic growth remains weak, but domestic demand is projected to recover in 2015, underpinned by supportive monetary policy and broader improvements in financial conditions. External demand growth is expected to be modest, but to recover in the course of 2016.

    • Estonia

      Economic growth is projected to strengthen gradually. Strong wage growth and falling unemployment will fuel private consumption growth. Exports, however, will be held back by weak economic growth in some of Estonia’s main trading partners and by losses in cost competitiveness due to high wage growth.

    • Euro Area

      Growth in the euro area slumped as 2014 wore on, and inflation — already negative in some countries — continued to drift down, reflecting considerable excess capacity. Economic activity is projected to recover slowly as confidence improves and uncertainty about banks’ balance sheets declines. However, growth will remain weak because of still-high public and private debt, tight credit conditions and high unemployment. A number of countries are still vulnerable to financial turmoil or other negative shocks. High unemployment and large margins of excess capacity will recede only slowly, putting continued downward pressure on inflation.

    • Finland

      Output is set to contract for the third year in a row in 2014. Rising unemployment and mounting uncertainties are undermining business and consumer confidence. Fiscal tightening is also weighing on economic activity. The upturn in both domestic and foreign demand is projected to be slow, as subdued income growth holds back consumption, global growth remains sluggish and ample spare capacity delays a pick-up in investment.

    • France

      After stagnating in the first half of 2014, economic activity picked up slightly over the summer. Real GDP growth is projected to continue at a slow pace in 2015 and gain slightly more momentum in 2016, rising by only 0.4% in 2014, 0.8% in 2015 and 1.5% in 2016. Improvements in the global environment, a favourable exchange rate, lower energy prices, and a significantly slower pace of fiscal consolidation will help growth. The benefits of on-going and announced structural reforms are sizeable but will be perceptible mostly over the medium term.

    • Germany

      Economic growth is weak, reflecting subdued activity in euro area trading partners and reduced demand growth in emerging economies. GDP growth is projected to strengthen gradually in 2015 and 2016, as a robust labour market and continued very expansionary monetary policy boost private consumption and residential investment. The unemployment rate is projected to remain low and consumer price inflation is set to rise somewhat.

    • Greece

      Following six years of deep recession, growth is projected to be positive in 2014, and to gain additional momentum in 2015-16. The recovery will be led by buoyant exports and strengthened investment activity, supported by improved competitiveness. The unemployment rate is set to decline gradually, but will nevertheless be close to 24% in 2016. Prices and wages will keep falling given large spare capacity, but at a slower pace.

    • Hungary

      Growth is projected to slow down as tight credit conditions and an uncertain business environment limit investment, and fiscal stimulus is about to come to an end. Inflation is projected to gradually converge to the 3% target and unemployment to stabilise over the projection horizon. Export dynamism will underpin a sizeable current account surplus.

    • Iceland

      Iceland continues to recover from its financial crisis. Economic growth strengthened in the second half of 2014 and GDP is approaching its pre-crisis peak level. Lower inflation, exchange rate stability, declining unemployment and improved fiscal accounts are all signs of macroeconomic normalisation. The recovery will continue to be driven by private consumption and business investment. While exports are projected to expand steadily, even with deteriorating competitiveness, they will be outpaced by imports and the current account balance will therefore deteriorate gradually.

    • India

      Activity is projected to pick up gradually. Corporate investment is recovering swiftly as business confidence has been boosted by the decline in political uncertainty and the commitment by the government to reduce red tape. Efforts to put large stalled infrastructure projects back on track are also beginning to pay off. Tight fiscal and monetary policies are needed to contain inflation, but will also restrain domestic demand. The current account deficit will increase slightly as domestic demand strengthens but remain sustainable.

    • Indonesia

      Economic growth has continued to slow as investment and exports have softened, although household consumption is holding up. The current account has widened again, and the rupiah has depreciated significantly as a result. Growth is projected to remain moderate through 2015 before picking up somewhat in 2016, due largely to an acceleration in investment and firming consumption.

    • Ireland

      After its robust rebound in 2014, the Irish economy is projected to continue growing strongly during the next two years. The expansion of activity will continue to be driven by business investment and exports. Employment growth and falling unemployment will take away spare capacity and moderately raise price and wage inflation.

    • Israel

      After a pronounced but temporary weakening in 2014, growth is projected to rebound to about 3% in 2015 and 3½ per cent in 2016, which should avert any rise in unemployment. The rebound in domestic demand that is expected to follow the end of the Gaza conflict, the projected strengthening of the external environment and the recent weakening of the exchange rate will sustain activity. The economy should also be supported by ever-lower interest rates and a pause in fiscal consolidation in 2015.

    • Italy

      After contracting during most of 2014, the economy is projected to return to growth by mid-2015 and accelerate somewhat further in 2016. ECB monetary policy support is expected to ease financial conditions and facilitate a resumption of bank lending, which should raise investment. The projected revival of Italy’s export market will also support stronger growth. The overall impact of fiscal policy will be small in 2015, as tax cuts will be offset by spending reductions. Unemployment will begin to decline in 2016, but is set to remain at high levels, while wage gains look set to remain modest.

    • Japan

      Output growth slowed to around ½ per cent in 2014, reflecting in part the impact of the consumption tax hike. Output growth is projected to rebound to around ¾ per cent in 2015 and 1% in 2016, supported by improving labour market conditions and expanded monetary easing. The weaker yen is expected to help sustain export growth and push inflation closer to the 2% target.

    • Korea

      Following the decline in private consumption in spring 2014, the economy is gradually rebounding, thanks in part to monetary policy easing, fiscal stimulus and measures to boost the housing market. Output is projected to grow at around 4% in 2015-16, helping to narrow Korea's large current account surplus and to lift inflation to the target range of 2.5% to 3.5%.

    • Latvia

      After a moderate slowdown in 2014, the recovery is projected to gain momentum, underpinned by a rebound in investment and improving export prospects. Economic activity will also be sustained by household spending but less than in the past.

    • Luxembourg

      Growth will slow somewhat in 2015, and then recover only partially in 2016, as the shift of the EU VAT regime for e-commerce from the seller to the buyer country weakens export growth and higher VAT rates bear on demand. The higher VAT will also boost consumer prices, and backward-looking wage indexation could transmit price rises to wages.

    • Mexico

      A strong rebound of exports, improved confidence and fiscal stimulus have driven a recovery, with manufacturing leading other sectors. The recovery is projected to gain momentum with growth of just over 2½ per cent in 2014 and about 4% in 2015, strengthening further in 2016.

    • Netherlands

      The recovery has been uneven as business investment has been volatile, but private consumption has started to recover. Growth should pick up somewhat as domestic demand gradually improves, but poor access to credit for small and medium-sized enterprises and low liquidity of household balance sheets are important headwinds. As a result of the tepid recovery, inflation is expected to remain low. The current account surplus exceeds 10% of GDP, reflecting strong exports and in part weak domestic demand.

    • New Zealand

      Economic growth is projected to moderate to a more sustainable rate of 2¾ per cent by 2016 as the boost from the Canterbury earthquake rebuild fades, the fall in export prices depresses domestic demand and macroeconomic policies become more restrictive. Still, the unemployment rate should edge down and wage growth increase modestly. With economic slack fully absorbed, consumer price inflation is projected to rise to 2% in 2016.

    • Norway

      Norway’s mainland economy has been partially insulated from global financial turbulence and oil price volatility, reflecting the well-functioning fiscal framework governing oil revenues. The economy is projected to retain its momentum despite lower oil prices and falling investment by the oil industry in the near term. Household demand will remain solid with steady employment gains and rising household net worth. Non-oil exports and business investment will firm as the global economy improves.

    • Poland

      Real GDP growth is projected to average 3.3% in 2014 and ease to 3% in 2015 before bouncing back to 3½ per cent in 2016, driven initially by a strengthening in domestic demand and a progressive recovery in export markets. Headline inflation is projected to remain low for a short while, before gently rising as economic slack diminishes.

    • Portugal

      Growth will gain momentum over the next two years. Further improvements in export performance will be the main driver of the continuing recovery in 2015, and the contribution of domestic demand will become larger in 2016 as investment and private consumption pick up. Unemployment is set to fall further but will remain high, putting a lid on wage and price increases. Very low inflation will support competitiveness, but it also makes it more difficult for the corporate sector to reduce its debt.

    • Russian Federation

      The economy is bottoming out, barely avoiding a recession. The falling oil price and the tensions regarding the conflict in Ukraine are undermining investor and consumer confidence. The rouble has sharply depreciated as a result of both factors, which has cushioned the economy to some extent. The strength of the recovery will depend on the flexibility of the economy and its ability to increase trade with non-sanctioning countries. Such a redirection of trade takes time, and real GDP is accordingly projected to stagnate next year, before slowly accelerating to around 1½ per cent in 2016 in the wake of an import-substituting investment recovery.

    • Slovak Republic

      Economic growth is projected to accelerate and to become more broad-based as domestic demand picks up. Household consumption growth rose in 2014, and is projected to remain strong in 2015 and 2016 thanks to higher employment and real wages. Exports and investment will gain strength as the international environment improves.

    • Slovenia

      Growth will remain weak in 2015 despite strong exports, as fiscal consolidation and labour market weakness bear on consumption, and restructuring, deleveraging and low credit activity hold back investment. Growth will strengthen in 2016 as these impediments fade and domestic demand recovers. Unemployment will decline slowly and inflation is projected to be low due to the significant economic slack that will persist into 2016.

    • South Africa

      In the first half of 2014, the economy slowed and inflation rose, before growth rebounded as widespread labour unrest came to an end. Growth is projected to pick up in 2015 and 2016 as exports recover on the back of a weak rand and firmer world trade growth. Private consumption will recover slowly in line with real incomes, while private investment will be held back by low capacity utilisation. The economic slack should contain inflation within the Reserve Bank’s target range.

    • Spain

      The recovery is projected to strengthen gradually over the next two years. The improving labour market and stronger confidence will aid private consumption. Investment will pick up as prospects improve. Export performance will keep improving boosted by competitiveness gains. The unemployment rate should decline gradually as growth picks up, but will remain high through the projection period. Spare capacity will keep wage growth down and price inflation very low.

    • Sweden

      Real GDP growth is projected to rise as exports gather momentum and consumption continues to grow steadily, even though private residential investment will slow. Job creation will gradually bring unemployment down, against the background of an expanding labour force. The more accommodative stance taken by the Riksbank since mid-2014 and gradually shrinking slack should help push up inflation.

    • Switzerland

      Economic growth is projected to pick up gradually in 2015-16. The recent slowdown in consumption should reverse course on the back of stronger confidence, rising real wages and sustained employment gains. Exports are projected to benefit from a weaker currency and gradually improving global growth. Weak commodity prices and remaining slack have delayed the exit from deflation.

    • Turkey

      Growth has lost momentum in 2014. Policies to hold back domestic demand in the face of a large current account deficit, increased volatility in capital flows and political uncertainties led to a sharp deceleration in private consumption and investment. This was offset to some extent by a pick-up in exports. In the context of serious regional geopolitical tensions and the sluggish recovery in Europe, exports are projected to be subdued and GDP growth to be relatively weak by Turkish standards, at 3¼ per cent in 2015 and 4% in 2016. The current account deficit is set to stay above 5% of GDP, and large short-term foreign debt refinancing needs make Turkey vulnerable to shifts in international investor sentiments.

    • United Kingdom

      Growth has been propelled by high job creation and is set to continue at a strong pace in 2015 and 2016, underpinned by robust private consumption and investment. With slack narrowing, inflationary pressures are projected to pick up gradually. Accordingly, the stance of monetary policy is assumed to begin to normalise in mid-2015 to contain inflation.

    • United States

      The US economy is projected to continue to grow steadily in 2015 and 2016. Solid increases in private employment will continue to push down the unemployment rate, though pockets of labour market slack will remain for a while. Monetary conditions and export markets should support some acceleration in demand, as the drag from tight fiscal policy dissipates and as improvements in household net worth provide a growing impetus to private spending.

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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 2014 to 2016 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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