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• Editorial: Trade Winds Blowing No Good?

  Global trade, which was already growing relatively slowly over the past few years, appears to have stagnated and even declined since late 2014. This is deeply concerning. Robust trade and global growth go hand in hand. Trade strengthens competition, keeping domestic firms fit and prices low, and expands variety for consumers and businesses. Technology transfer through trade contributes to the diffusion of new technologies and productivity growth. World trade has been a bellwether for global output. The growth rates of global trade observed so far in 2015 have, in the past, been associated with global recession.

• General Assessment of the Macroeconomic Situation

  Global growth prospects have clouded this year. A further sharp slowdown in emerging market economies (EMEs) is weighing on global activity and trade, and subdued investment and productivity growth is checking the momentum of the recovery in the advanced economies. Supportive macroeconomic policies and lower commodity prices are projected to strengthen global growth gradually through 2016 and 2017, but this outcome is far from certain given rising downside risks and vulnerabilities, and uncertainties about the path of policies and the response of trade and investment.

• Cool Policy: Climate Change Mitigation Supporting Growth

  Climate change must be tackled decisively to avoid future costs, especially to reduce the likelihood of catastrophic changes. Stabilising greenhouse gas concentrations will eventually require a zero net carbon emission economy.

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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

    Economic growth is projected to recover to 3% in 2017. Ongoing decline in resource-sector investment will be offset by strengthening consumption, non-resource sector investment and exports. Consumer price inflation will increase gradually as the economic upswing gathers momentum and the labour market starts tightening.

  • Austria

    A gradual recovery is underway and economic growth is projected to reach 1.7% by 2017. The recovery will be driven mainly by historically low interest rates, lower oil prices, a pick-up in foreign demand and a weaker euro. Consumer confidence remains weak but the income tax reform, to enter into force in 2016, will boost private consumption.

  • Belgium

    Economic growth is projected to strengthen slowly. A pick-up in private investment will be underpinned by favourable financial conditions and export growth is expected to benefit from stronger growth in Europe. However, household consumption will be held back by ongoing fiscal consolidation and wage restraining measures. Nonetheless, activity should be sufficiently strong to allow a slow decline in unemployment. Inflation is set to tick up as the effects of lower energy prices dissipate.

  • Brazil

    The recession is projected to continue into 2016, due to needed fiscal adjustment, tighter monetary policy to contain inflation and a lack of investor confidence related to political uncertainty. A slow recovery is expected to unfold into 2017 as confidence in macroeconomic policies improves. Unemployment is set to increase further in 2016. Although inflation expectations have come down, the return of inflation to the central bank’s target is likely to be delayed by the recent sharp depreciation of the currency.

  • Canada

    Economic growth is projected to recover in 2016, and reach 2.3% in 2017. The drag from falling energy investment should fade away by early 2016, while non-energy exports lead the subsequent pick-up, with business investment following. As economic slack is taken up through 2016, inflation should increase to above the 2% midpoint of the Bank of Canada’s inflation target range in 2017.

  • Chile

    Economic growth is weak, reflecting low commodity prices, but is projected to pick up gradually over the next two years. Activity is now being sustained by public spending, but will get futher impetus from stronger private domestic and external demand. Inflation will remain temporarily high as a consequence of the sharp depreciation of the peso, but is projected to decline towards the central bank’s target as the effects of depreciation wear off and unemployment rises.

  • China

    Economic growth is projected to decline gradually to 6.2% by 2017. The announced infrastructure stimulus measures will help overall investment, but adjustment in several heavy industries is set to continue and this stimulus is not sustainable in the longer term. Real estate investment is bottoming out, but working off housing inventories will take some more time. Consumption is set to remain robust. Food and services prices are rising, but the absence of price pressures in other areas will keep consumer price inflation low.

  • Colombia

    Economic growth slowed in 2015 due to the fall in commodity prices, but is projected to gradually recover in 2016 and 2017 with investment and non-oil exports recovering. The sharp devaluation of the peso and the effect of El Niño have pushed inflation above the central bank’s target range. The peace talks set to conclude end-March 2016 will boost confidence and generate investment and jobs. Inequality and relative poverty have declined but remain high.

  • Costa Rica

    Output growth is projected to increase from 2.9% in 2015 to 3.5% in 2016 and 4.1% in 2017.Exports will recover in 2016 following the slump in 2015, which was caused mainly by the closure of a large electronics plant. As the effects of falling oil prices wear off, inflation will pick up in the next two years. Unemployment will remain close to 10%.

  • Czech Republic

    Economic growth picked up strongly in 2015, driven by private demand and a boost from EU-financed public investment. Supportive financial conditions, growth in wages and profits and strengthening external demand are projected to support robust growth in 2016 and 2017. Rising domestic costs will push inflation to the 2% target level in 2017.

  • Denmark

    GDP is projected to grow in 2016 and 2017 at just under 2%, supported by investment and a pick-up in world trade. Households will continue to reap the benefits of low inflation and energy prices and a stronger labour market. Exporters will get a boost from the weaker effective exchange rate and stronger growth in the European Union.

  • Estonia

    Growth is projected to strengthen gradually in the coming two years. It will be supported by an upswing of investment and exports, which will benefit from stronger growth in the European Union. Private consumption will grow in line with real household income.

  • Euro area

    GDP growth is projected to rise to almost 2% in 2016 and 2017, despite a slowdown in several emerging markets. Activity will continue to be supported by sustained monetary stimulus, a broadly neutral fiscal stance and lower oil prices. High private indebtedness will remain a drag on consumption and investment in many countries. Unemployment will decline only gradually, and the stark differences across countries within the euro area will persist. Inflation should edge up to just under 1½ per cent by the end of the projection horizon as the effects of cheaper energy wane and cyclical slack decreases, even though high uncertainties surround inflation projections.

  • Finland

    The economy is slowly coming out of a long recession. Economic activity was broadly flat in 2015, but is projected to strengthen in 2016. Export growth remains subdued despite the weaker euro, as global demand for capital goods has weakened and exports to Russia have collapsed. Domestic demand is being held back by rising unemployment, low income growth, weak confidence and ample spare capacity.

  • France

    Economic growth is projected to rise gradually to 1.3% in 2016 and 1.6% in 2017 thanks to lower oil prices, less fiscal contraction and the cumulative effects of sustained monetary stimulus. Rising wages, exchange rate pass-through and stabilising energy prices should bring a pick-up in inflation, despite significant economic slack. Low energy prices, strengthening external demand and pro-competitive reforms are expected to underpin an increase in consumption and export volumes. However, declining house prices and weak business confidence are continuing to weigh on investment, and unemployment will decline only slightly.

  • Germany

    Economic growth is projected to strengthen in 2016, as a robust labour market, low interest rates and low oil prices underpin private consumption. Weaker demand from emerging market economies will gradually be offset by stronger exports to other euro area economies. Business investment is expected to recover with rising capacity utilisation. The refugees with prospects to stay durably will enter the labour market gradually and can help reduce the impact of demographic change in the medium term. The unemployment rate will remain historically low. The current account surplus will narrow somewhat but will remain very high.

  • Greece

    The economy slipped back into recession in the latter part of 2015 after growing in late 2014 and the first half of 2015. Growth is projected to gain some momentum in the second half of 2016 as confidence strengthens and as structural reforms finally take hold and boost exports and investment. Inflation remains low due to the very depressed state of the economy. Unemployment will decline, but only gradually, which emphasises the importance of poverty reduction efforts.

  • Hungary

    Economic growth was strong in 2015 but is projected to slow in 2016 as public investment declines and the fiscal stance becomes less accommodative. Activity should rebound in 2017 on the back of renewed public investment. Private demand should remain fairly robust over the coming two years. Economic growth and the public work schemes are projected to boost employment. Inflation will pick up and could reach the central bank’s inflation target of 3% at the end of the projection period as economic slack disappears.

  • Iceland

    The economy continues its robust recovery. Strong household income growth and investment will fuel domestic demand in 2016. However, as investment slows and interest rates increase growth will begin to moderate. Lifting the capital controls introduced during the financial crisis is planned to begin in 2016.

  • India

    Economic growth is projected to remain robust, at around 7¼ per cent over the projection period. Public investment has picked up with faster clearance of key projects; better infrastructure and greater ease of doing business are promoting private investment; and more generous benefits and wages for public employees are supporting private consumption. Even so, large non-performing loans, high leverage ratios for some companies and difficulty in passing key structural reforms are holding the economy back. The current account deficit is widening as machinery imports increase, but is largely financed by rising foreign direct investment inflows.

  • Indonesia

    Growth is projected to pick up gradually next year and reach 5.5% in 2017. Public spending should gather pace, and the impact of the significant fall of the rupiah since early 2014, notwithstanding its a recent strengthening, should provide a boost. Low prices for many primary commodities and regulatory uncertainty will continue to hold back private investment.

  • Ireland

    The Irish economy is projected to continue its strong expansion in the next two years. Exports will rise in line with increasing demand in its trading partners. Business investment should remain robust thanks to rising profitability and favourable financing conditions. Growth will provide momentum to job creation and reduce the still high rate of unemployment, thereby spreading the fruits of the recovery more widely. Household consumption will be supported by labour earnings growth.

  • Israel

    After a moderate pace in 2015, economic growth is projected to pick up to around 3¼ per cent in 2016 and 2017. This increase in activity should keep unemployment low. A rise in the minimum wage, falling oil prices and budgetary measures to stimulate the economy will support domestic demand, while exports are likely to recover with the improvement in the global economy.

  • Italy

    GDP growth is expected to rise to 1.4% in 2016 and 2017. The labour market is improving, helping to drive private consumption higher. However, bank credit remains constrained due to the large and still rising amount of non-performing loans, hampering investment growth. Sluggish export market growth is hindering exports. Large, although declining, economic slack will contain consumer price and wage inflation.

  • Japan

    The economic expansion was derailed in 2015 by a sharp slowdown in demand from China and other Asian countries and sluggish private consumption. Output growth is projected to pick up from around ½ per cent in 2015 to 1% in 2016, as rising real wages support consumer spending. However, with the consumption tax hike in 2017, growth is likely to slow to ½ per cent. Headline consumer price inflation, which has fallen close to zero with the decline in oil prices, is projected to reach 1½ per cent by end-2017.

  • Korea

    The economy was hit by two shocks in 2015 - an outbreak of the Middle East Respiratory Syndrome (MERS) and a marked slowdown in demand from China and other Asian countries – that reduced output growth to around 2¾ per cent. While the MERS outbreak has been resolved, weaker demand from Asia remains a headwind to growth. Nevertheless, a pick-up in private consumption is projected to increase output growth to 3% in 2016 and 3½ per cent in 2017, while inflation rises to around 2%.

  • Latvia

    GDP growth is projected to accelerate to 3.1% in 2016 and 3.5% in 2017, mainly driven by domestic demand. High wage growth will further sustain household consumption. Exports will pick up following the trade recovery in the European Union and support investment, but export performance will be weakened by increases in unit labour costs.

  • Lithuania

    Economic growth is projected to pick up from 1¾ per cent in 2015 to 3¾ per cent in 2017. Activity will be underpinned by continued private consumption growth and stronger exports. The trend decline in the unemployment rate will continue, and as a result wage pressures will slowly begin to mount.

  • Luxembourg

    Economic growth in 2016 and 2017 will remain anchored around 3%, supported by the strengthening cyclical position of the euro area and rebounding activity in the financial sector. Higher VAT rates and solid growth will boost inflation pressures, and the next round of backward-looking wage indexation expected in early 2016 could also boost inflation.

  • Mexico

    After growing by 2.3% in 2015, real GDP is projected to grow in excess of 3% in both 2016 and 2017. The economy will benefit from a stronger US economy, the depreciation of the peso, and the easing of problems in the construction sector. The implementation of important structural reforms has also improved the business climate. Consequently, investment is picking up, and manufacturing activity is gradually accelerating, supporting a robust formal job market, boosting household incomes and consumption growth.

  • Netherlands

    Economic growth is projected to strengthen further and to remain broad-based. Private consumption and residential investment will remain robust thanks to the housing market recovery, employment growth and a reduction in income taxes. The brighter economic outlook should further support business investment. The relatively strong performance of the Netherlands’ key export markets will underpin export growth.

  • New Zealand

    Economic growth is projected to slow to 1.9% in 2016 before recovering slightly in 2017. Activity is being held back by a sharp fall in global dairy prices, softer external demand, a diminished boost from the Canterbury rebuild and a predicted drop in agricultural output due to drought as a result of El Niño. A normalisation of weather conditions, along with additional monetary stimulus and faster global growth should provide greater support to exports and business investment in 2017.

  • Norway

    Growth is projected to recover gradually in 2016 and 2017 as non-oil investment picks up in response to higher exports and some new oil investment projects start up. Aggregate demand will also be sustained by accommodative macroeconomic policies. Unemployment will rise but remain low in the OECD context. Inflation has been temporarily boosted by currency depreciation but is otherwise contained by remaining cyclical slack. The extensive welfare state is cushioning the impact of the economic slowdown on well-being and protecting the vulnerable.

  • Poland

    Real GDP should continue to grow around 3½ per cent annually, supported by solid investment and consumption growth. Considerable infrastructure investment supported by EU funds will continue to underpin productivity and GDP growth, despite a temporary slowdown in 2016 at the switchover of budget periods for EU funds. Consumer price inflation is expected to gradually recover as the effect of sharp falls in energy and food prices fades.

  • Portugal

    The economic recovery is projected to continue in 2016 and 2017, boosted by private consumption and exports. However, growth will ease from the high rate in 2015, as much of the current investment pick-up is likely to lose steam once capital stocks have been rebuilt, following a decline in investment of nearly 35% between 2007 and 2014. The pace of the recovery will allow further reductions of the unemployment rate, albeit only small ones.

  • Russia

    The economy is in recession. Falling oil prices, international sanctions and capital flight have reduced investment, domestic consumption and imports. The large depreciation of the ruble has pushed inflation to double digits and reduced real incomes, especially of the poorest. Recovery will be only gradual against the backdrop of an uncertain external environment and lack of structural reforms. Unemployment will rise from the current low levels. Growth is projected to turn positive in 2017 as exports strengthen and domestic demand recovers.

  • Slovak Republic

    Economic growth has been robust in 2015 and is projected to increase to around 3½ per cent in 2016 and 2017. Improvements in the labour market and rising incomes will support private consumption. The launch of new car models and the modernisation of production lines by incumbent foreign investors will provide additional momentum to the car industry. Solid growth in the euro area and easing financing conditions will boost investment and exports.

  • Slovenia

    Economic growth will be supported by strong exports and gradually recovering private consumption and investment. The improving labour market will raise incomes and the healthier corporate sector will boost investment and improve competitiveness. Growth will slow temporarily in 2016 as investment is expected to decelerate, due to the lower inflow of EU funds. Unemployment will decline gradually, but remaining slack will contain inflation.

  • South Africa

    The outlook for 2016 and 2017 is uncertain and economic activity will likely remain subdued. Expected increases in electricity supply from investments in generating capacity should raise supply only by 2017, easing constraints that have hindered production and increasing investor confidence. Also, strengthening growth in major trade partners, such as Europe and the United States, should reinforce export growth. Inflation is hovering around the upper end of the target band, driven by the depreciation of the rand and higher electricity and food prices.

  • Spain

    A robust economic recovery in Spain is projected to continue into 2016 and 2017, though at a gradually slowing pace as the positive impact of the depreciation of the euro, and lower oil and other commodity prices, dissipate. Low borrowing rates for businesses and households will also continue to provide support together with the fiscal stance, which is expected to be mildly expansionary over the next two years. These factors, together with the implementation of significant structural reforms, are increasing business confidence.

  • Sweden

    Output will continue to grow briskly, at around 3% per annum, supported by low interest rates and rising wages, which will lift consumption and inflation. Employment continues to grow and unemployment is declining. Business investment will increase further in response to rising demand, and surging house prices will continue to support residential investment, but may also pose risks.

  • Switzerland

    Economic growth is projected to strengthen gradually, as a pick-up in global demand offsets the headwinds from the strong currency. Ultra-low interest rates, robust population growth, mainly driven by immigration, and lower import and commodity prices will support domestic demand. Resuming growth and the recent depreciation of the franc should allow inflation to become positive at the beginning of 2017.

  • Turkey

    GDP growth is projected to increase from 3% in 2015 to above 4% in 2017, as political uncertainties are assumed to fade, employment continues to rise, and the exchange rate depreciation and the gradual strengthening of global markets support export growth. The geopolitical crisis at the southern border and the associated influx of refugees pose challenges. Currency depreciation until October has strengthened price competitiveness, but has also weakened household confidence, created pressures on corporate balance sheets and added to already high inflation.

  • United Kingdom

    Economic growth is projected to continue at a robust pace over the coming two years, driven by domestic demand. House prices have continued to rise, although housing supply is edging up. The unemployment rate has stabilised at around 5.5%, and recently wage growth has picked up. Projected increases in labour productivity should underpin real wage growth. The trade deficit has remained contained, but weak global trade and past currency appreciation are holding back exports. Inflation is expected to increase towards the 2% inflation target as pressures on capacity emerge.

  • United States

    Output remains on a solid growth trajectory, propelled by household demand. Steady employment gains continue to push down the unemployment rate and other indicators of labour market slack. Domestic demand will continue to be sustained by supportive financial conditions, the improving labour market and the boost to household purchasing power from low energy prices and the stronger dollar. However, the boost from these influences should gradually subside, and will be damped by weaker export growth due to sluggish external demand and the recent strengthening of the dollar.

  • 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 2015 to 2017 are OECD estimates and projections. 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 time-varying weights. For details on aggregation, see OECD Economic Outlook Sources and Methods.

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