OECD Economic Outlook

English
Frequency
Semiannual
ISSN: 
1609-7408 (online)
ISSN: 
0474-5574 (print)
http://dx.doi.org/10.1787/16097408
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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 2017 Issue 1

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Author(s):
OECD
30 June 2017
Pages:
336
ISBN:
9789264277649 (PDF) ; 9789264277656 (EPUB) ;9789264277632(print)
http://dx.doi.org/10.1787/eco_outlook-v2017-1-en

Hide / Show Abstract

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, a special chapter on how to make trade work for all and a chapter summarising developments and providing projections for each individual country. A statistical annex is available on the web.
The Statistical Annex is available on line only at https://dx.doi.org/10.1787/eco_outlook-v12017-1-en
 

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  • Editorial: Global Economic Outlook: Better, but not good enough

    The mood in the global economy has brightened during the last year. Confidence indicators, industrial production, headline measures of employment, and cross-border trade flows have improved in most economies. However, this still-modest cyclical expansion is not yet robust enough to yield a durable improvement in potential output or to reduce persistent inequalities. Financial vulnerabilities could be realised by policy and geopolitical shocks. Compared to the 20-year pre-crisis average against which expectations have been set, OECD per capita GDP growth remains over ½ percentage point weaker and global growth overall, projected to rise to just above 3½ per cent by 2018, also lags. In sum, the global economic outlook is better, but not good enough to sustainably improve citizens’ well-being.

  • General assessment of the macroeconomic situation

    After many years of weak recovery, with global growth in 2016 at the lowest rate since 2009, some signs of improvement have begun to appear. Trade and manufacturing output growth have picked up from a very low level, helped by firmer domestic demand growth in Asia and Europe, and private sector confidence has strengthened. But policy uncertainty remains high, trust in government has diminished, wage growth is still weak, inequality persists, and imbalances and vulnerabilities remain in financial markets. Against this background, a modest pick-up in global GDP growth is projected this year to 3½ per cent, with an upturn in trade and investment intensity and improving outcomes in several major commodity producers. Only a small improvement is in prospect for 2018, taking global GDP growth to 3.6%. With modest additional pressures in labour and product markets, inflation is likely to remain subdued in the major economies, provided commodity prices do not strengthen further.

  • How to make trade work for all

    International trade has been a powerful engine of global economic growth and convergence in living standards between countries. Trade liberalisation has contributed to large economic gains of emerging market economies and to poverty decline. Specialisation according to comparative advantage and, increasingly, technology-driven and deeper trade integration through global value chains have created new business opportunities and increased economic efficiency. Access to a wider variety of goods and services at cheaper prices has raised well-being and consumers’ purchasing power.

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  • Expand / Collapse Hide / Show all Abstracts Developments in individual OECD and selected non-member economies

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    • Argentina

      Economic growth is projected to rebound strongly in 2017 and 2018 as recent reforms gain traction and exports strengthen. Investment will pick up, supported by an improving business climate and infrastructure investment. Inflation remains high, but will decrease in line with the central bank’s target, as monetary policy remains restrictive and the effect of administrative price increases and the depreciation of the peso are wearing off. Stronger growth will gradually reduce unemployment.

    • Australia

      Economic growth is projected to increase gradually and reach almost 3% by 2018. The drag on growth from declining resource-sector investment will fade and gathering momentum outside the resource sector will support wage and employment growth, thus boosting consumer spending. Tightening labour and product markets will bring inflation up from current low levels.

    • Austria

      The economy is gaining strength, underpinned by private consumption and the recovery of investment and exports. Fiscal policy will remain slightly expansionary. Employment creation remains strong and unemployment is set to decline for the first time since 2011. Consumer price inflation remains higher than in other euro area countries.

    • Belgium

      Economic growth, which has been subdued, is projected to strengthen in 2017 and 2018. Private investment will be the main driver of growth, in response to high capacity utilisation and favourable financial conditions. A pick-up in international trade will support exports. Private consumption, however, will be moderated by still subdued real wage growth. Tighter labour and product markets will push up inflation in 2018.

    • Brazil

      The economy is finally emerging from a severe and protracted recession. Still, the recovery is projected to be weak and slow. Consumer and business confidence is rising and agricultural exports started the year on a strong footing. However, unemployment is projected to decline only towards the end of this year, and then to fall only gradually. Inflation has decreased significantly, partly due to lower demand, and is projected to close the year below the 4.5% inflation target. Inequality remains high.

    • Canada

      Economic growth is projected to increase in 2017, driven by expansionary fiscal policy, household wealth gains and a resumption in business investment, in particular in the resource sector following the rebound in commodity prices. In 2018, growth is likely to ease but remain robust, as government spending increases taper off. Consumer price inflation is expected to rise to above 2% in late 2018 as excess capacity is gradually eliminated and wage growth picks up.

    • Chile

      Economic growth is projected to gradually strengthen to 2.8% in 2018. The pick-up will be underpinned by improving external demand and, reflecting more accommodative financial conditions, investment. The unemployment rate is projected to stabilise and wage growth to pick up, both of which will lower income disparities and raise consumption. Inflation is projected to increase as the impact of the past currency appreciation fades and aggregate demand strengthens.

    • China

      Economic growth is projected to hold up in 2017 and 2018, partly thanks to the impact of earlier fiscal and monetary stimulus. Infrastructure investment is picking up on the back of regional development initiatives, including the Belt and Road and the Beijing-Hebei-Tianjin Corridor. Real estate investment will remain buoyant notwithstanding measures to restrict demand. Private investment growth has bottomed out and consumption growth will remain stable, underpinned by continued strong job creation. Recovering global demand will spur exports, but surging tourism imports will limit the effect on the current account balance.

    • Colombia

      Economic growth is projected to rise through 2017 and 2018. The historic peace agreement, higher oil prices and the start of infrastructure projects will boost investment. Private consumption will grow moderately. Stronger growth is projected to stabilise the unemployment rate. As the effects of El Niño wear off, inflation is projected to return to the central bank target range of 2-4% at the end of 2017. Although poverty has declined, inequality remains high.

    • Costa Rica

      The economy is projected to continue expanding at a robust pace, owing to higher external demand and increasing public investment. Rising commodity and energy prices will help inflation rise towards the central bank’s target range.

    • Czech Republic

      Economic growth is projected to pick up in 2017. The increase in the minimum wage in January and ongoing strong labour demand will benefit workers and boost consumption. Private and public investment are recovering. Labour shortages will constrain growth in 2018 and add some inflationary pressure, keeping inflation above the 2% target through 2018.

    • Denmark

      Economic growth is projected to strengthen in 2017 and 2018, on the back of stronger private consumption, stronger foreign demand and a very accommodative monetary policy stance. With labour markets tightening, inflationary pressures will surface. Public investment is set to ease. The current account surplus will remain sizeable, driven by an improving trade balance and strong income from large net foreign asset holdings.

    • Estonia

      Economic growth is projected to rise significantly in 2017 and to exceed 3% in 2018. Domestic demand will strengthen, sustained by public and private investment. Household spending is set to slow as inflation will resume and cut into slow nominal income gains.

    • Euro area

      GDP growth is projected to remain around 1¾ per cent in 2017 and 2018. Domestic demand will continue to lead the recovery, benefiting from accommodative monetary policy and, more recently, from welcome mildly expansionary fiscal policy. Exports are projected to strengthen, but at a moderate pace, in line with global growth. The unemployment rate will keep declining, but will remain high at around 9%.Inflation will pick up on the back of higher energy prices and narrowing slack, but will remain below the ECB target.

    • Finland

      Growth is projected to strengthen as higher foreign demand and improved competitiveness boost exports. Domestic demand will be held back by slow income growth, but brightening employment prospects and consumer confidence, together with low interest rates, will support consumption and residential investment. Inflation will pick up gradually, as spare capacity shrinks.

    • France

      Economic growth is projected to continue to strengthen to about 1½ per cent in 2018, boosted by investment and consumption. Firming domestic demand will be supported by rising confidence, cuts in social contribution and business taxes and continued favourable financing conditions. The labour market will gradually recover. Inflation will remain low, since pressures on production capacity are limited. The current account deficit is expected to increase slightly, as solid domestic demand will boost imports.

    • Germany

      Economic growth is projected to remain solid, and the unemployment rate to fall further. Low unemployment and higher government spending will underpin private consumption. Low interest rates and immigration should sustain residential investment, but business investment is set to strengthen only gradually. Exports are benefiting from strong demand in Asia and the United States, but will weaken as the impact of past euro depreciation fades and import growth in China slows. The current account surplus will narrow somewhat, mostly as a result of higher energy prices. Strong revenue growth is projected to keep the government budget in surplus.

    • Greece

      After a prolonged depression, the economy stabilised in 2016 and GDP is projected to grow by 1.1% in 2017 and 2.5% in 2018. The labour market is improving, supporting private consumption, and higher demand from abroad is boosting exports. Investment has started to recover from very low levels and should gather pace. The consumption tax increase in early 2017 and recent energy price increases will raise consumer price inflation, even though core inflation will remain moderate, as ample spare capacity persists.

    • Hungary

      Economic activity slowed temporarily in 2016, but has since rebounded, fuelled by public investment as the disbursement of EU structural funds resumed. Business investment should expand on the back of inward FDI and emerging capacity constraints. Continued robust private consumption will rely on further employment gains and higher real wages, driven by unemployment at record-low levels. Declining external cost competitiveness will limit gains in export markets.

    • Iceland

      Economic growth is projected to remain strong, thanks to continued vibrant tourism activity and strong domestic demand. Positive sentiment and rising asset prices are fuelling residential and business investment. Wages and employment are rising fast. The capital controls introduced during the financial crisis have been lifted.

    • India

      Economic growth is projected to remain strong and India will remain the fastest-growing G20 economy. The increase in public wages and pensions will support consumption. Private investment will recover gradually as excess capacity diminishes, and the landmark Goods and Services Tax and other measures to improve the ease of doing business are being implemented. However, large non-performing loans and high leverage of some companies are holding back investment.

    • Indonesia

      GDP growth should firm in 2017. Private consumption is underpinning activity. Infrastructure spending is rising, notwithstanding fiscal constraints, and external demand is firming. Private investment is growing only moderately.

    • Ireland

      After expanding very strongly over the past two years, the economy is projected to grow at a more sustainable pace in 2017 and 2018. Notwithstanding this moderation, domestic demand will remain solid. As the labour market tightens, wage pressures will continue to be strong, which is projected to feed into higher inflation. Firms are projected to expand at a slower pace than in past years due to already high labour costs and high external uncertainty, including the final outcome of the Brexit negotiations.

    • Israel

      After picking up to 4% in 2016, growth is projected to be around 3¼ per cent in 2017-18. Inflation is projected to firm up gradually. The maintenance of expansionary monetary and fiscal policies and projected wage increases will continue to shore up domestic demand.

    • Italy

      GDP is projected to grow by 1% in 2017 and 0.8% in 2018. Rising global demand and the recent depreciation of the euro are supporting exports. Business investment is strengthening, but public investment has not yet recovered. Private consumption growth remains robust despite slowing job creation and modest wage gains. Inflationary pressures are subdued because of large spare capacity, although recent energy and food price increases have pushed up consumer prices.

    • Japan

      Economic growth is projected to edge up to 1.4% in 2017, aided by stronger international trade in Asia and fiscal stimulus. Although fiscal support is expected to fade in 2018, labour and capacity shortages and record-high corporate profits will support employment and business investment, keeping growth close to 1%. Headline inflation will reach 1% by end-2017, due to ongoing monetary easing.

    • Korea

      GDP growth declined in the latter part of 2016 in the context of political uncertainty, corporate restructuring and a drop in exports. Assuming that domestic and international political uncertainty dissipates, growth is projected to edge up to 2.8% in 2018, supported by a pick-up in exports and rising business and consumer confidence. Inflation reached the 2% target in early 2017, while the current account surplus is expected to remain large at 6% of GDP.

    • Latvia

      Economic growth is projected to pick up in 2017. Stronger growth in the euro area and Russia will support exports, which, along with the disbursement of EU funds, will boost investment. Household consumption will be robust, supported by strong wage growth. However, unemployment will remain high, reflecting regional and skill mismatches between workers and jobs. Higher energy prices will raise inflation somewhat and reduce the current account surplus.

    • Lithuania

      Economic growth is projected to strengthen as investment related to EU funds and external demand gather steam. Employment growth is limited due to a shrinking labour force and skill shortages. A temporary spike in energy prices and rising nominal wages will push up inflation.

    • Luxembourg

      Economic growth is projected to stay robust at above 4% in 2017 and 2018, due to strong domestic demand and strengthening activity in the domestic financial sector, which will foster exports. Inflation is rising due to higher commodity prices and increasing wages, due to automatic wage indexation. Unemployment is falling, but, at 6%, the rate remains high.

    • Mexico

      After decelerating in late 2016, the pace of economic activity is projected to pick up somewhat, mainly reflecting stronger exports. Improved business confidence will support the upturn in investment. Consumer spending, the engine of growth in the past two years, will grow at a slower pace, as rising inflation damps consumers’ purchasing power and credit conditions tighten.

    • Netherlands

      GDP growth is projected to remain at or just over 2% in 2017-18. Private consumption growth will stay solid through the projection period, as wage growth picks up and unemployment declines further. Business and residential investment will remain strong, both supported by rising confidence.

    • New Zealand

      Economic growth is projected to ease to around 3% in 2017-18. A strong recovery in business investment, ongoing strength in tourism and the recent increase in dairy prices should support growth. Net immigration is assumed to fall, slowing both household consumption and, together with the wind-down in the Canterbury earthquake rebuild, construction expenditure, despite a planned boost to government infrastructure spending. Inflation is projected to rise sustainably to around the mid-point of the official 1-3% target range.

    • Norway

      The economy is projected to strengthen gradually thanks to stronger growth of private consumption and both petroleum and non-oil investment. Employment growth will pick up and increasing activity will lift consumer price inflation from its current low level.

    • Poland

      GDP growth is projected to exceed 3% in 2017 and 2018 as domestic demand accelerates and investment recovers on the back of growing business confidence, faster EU structural funds disbursement and low real interest rates. Underlying price pressures are set to build as the labour market tightens.

    • Portugal

      Economic growth is projected to strengthen to around 2% in 2017 before easing slightly in 2018. Exports will continue to support growth, benefitting from the structural reforms of recent years. Nevertheless, domestic demand is not projected to rebound strongly given persistently high private sector indebtedness. Underlying inflation will pick up in 2018, owing to supply constraints, including a declining working-age population.

    • Russia

      The economy is projected to rebound from a deep recession on the back of stronger oil prices, higher wages and lower interest rates, which will boost household consumption and business investment. Structural bottlenecks hamper the diversification of production, and the relatively strong rouble and continued sanctions will restrain non-oil exports. The poverty rate will gradually decline as the labour market strengthens and inflation abates further.

    • Slovak Republic

      The economy is projected to remain robust, growing 3.3% in 2017 and 4.1% in 2018, led by persistently strong domestic demand. The strengthening labour market and rising incomes will further raise household consumption. Unemployment may fall to near 7½ per cent in 2018, the lowest level since independence. Exporters are projected to continue to gain market share, allowing the current account to reach a modest surplus. Consumer price inflation is expected to rise gradually, as energy prices pick up and the labour market tightens.

    • Slovenia

      Economic growth is projected to remain solid and broad-based. Investment will accelerate as more EU structural funds are disbursed and capacity constraints bite. A strong labour market will lead to faster wage gains, supporting private consumption. Euro area growth should help exports remain buoyant despite cost increases. Higher energy prices and the disappearance of economic slack should push up inflation.

    • South Africa

      Economic growth is projected to continue to be weak in 2017 before picking up moderately in 2018, as private consumption and exports rise on the back of a recovery in commodity prices and growth in export markets. Unemployment and inequality will remain high, reflecting large skill gaps and low education quality. Inflation has been above target, due to the rand depreciation and rising food prices, but is easing.

    • Spain

      The recovery is projected to remain robust in 2017 and 2018, although at a more moderate pace as the boost to private consumption provided by low oil prices and lower taxes eases. Growth will be driven by both domestic demand, supported by low interest rates and strong employment growth, and a positive external outlook. Inflation will remain subdued due to still high unemployment.

    • Sweden

      The economy is still growing strongly, underpinned by solid demand, labour force expansion, rising productivity and a brightening international outlook. However, shortages of qualified labour and constructible land are slowing residential investment. The decline in the unemployment rate is levelling off as difficult-to-hire low-skilled workers make up a rising share of jobseekers. A three-year wage agreement with modest wage increases should restrain inflationary pressures and, together with persistently high household saving, hold back consumption.

    • Switzerland

      GDP growth is projected to rise gradually, which will reduce unemployment. The low interest rate environment is set to continue, helping to revive domestic demand. Deflation seems to have been overcome, but inflation is projected to remain low through 2018. The large current account surplus will persist.

    • Turkey

      Economic growth is projected to edge up to around 3½ per cent in 2017 and 2018. Consumer price inflation is back in double digits and disinflation is projected to be slow.

    • United Kingdom

      The economy is projected to slow in 2017 and 2018, owing to uncertainty about the outcome of the Brexit negotiations. This projection assumes that the United Kingdom's external trade will operate on a most favoured nation basis from April 2019. The uncertainty, and the assumed outcome, is projected to undermine spending, in particular investment. Policies have supported private confidence and consumption, but household spending is projected to ease as the combination of a weakening labour market and higher inflation reduces real wage growth. The current account deficit has narrowed and exports should support growth, stimulated by improved competitiveness.

    • United States

      Economic growth is projected to pick up in 2017 and 2018 as headwinds from past exchange rate appreciations abate and support from fiscal policy begins to appear. Consumer spending will benefit from continued, though slowing, employment gains and, as the labour market tightens, stronger wage growth.

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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 2017 to 2018 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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