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2003 OECD Economic Outlook, Volume 2003 Issue 1

image of OECD Economic Outlook, Volume 2003 Issue 1

Twice a year, the OECD Economic Outlook analyses the major trends that will mark the next two years. The present issue covers the outlook to the end of 2004 and examines the economic policies required to foster high and sustainable growth in member countries. Developments in selected major non-OECD economies are also evaluated.

In addition to the themes featured regularly, this issue contains five analytical chapters addressing the following questions: the telecommunications sector,  sources of divergence in growth trends among the major economies, recent patterns and developments in foreign direct investment,  and whether further trade and regulatory policy reforms would affect foreign direct investment flows and economic integration among OECD countries.

English French, German

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Developments in Selected Non-member Economies

Economic activity continued to recover in the non-member Asian region throughout most of 2002, led by double-digit growth in exports. The expansion gained further momentum during the second half in China, but decelerated in Dynamic Asia in response to the renewed weakness in the United States and other OECD countries. Growth in Dynamic Asia should rebound in 2003 if OECD markets recover, but is subject to significant risks from geopolitical tensions, along with structural problems and the potential fallout from the outbreak of disease in several economies. China is less exposed to external risks, but further progress on structural reforms to achieve more balanced growth in the domestic economy are likely to be needed to sustain rapid growth in real GDP beyond the near-term.

Economic growth in Russia and other Newly Independent and South-East European States slowed to below 5 per cent in 2002. In a weak global environment, growth was mainly driven by strongly expanding internal demand, boosted in many countries by sizeable increases in wages and social benefits. Growth is expected to remain robust in 2003 at around 4 to 5 per cent, both for Russia and the region, but may slow further in 2004. In some countries, including Russia, higher growth in commodities and basic manufactures, compared to more complex manufactured goods, may increase the future vulnerability of these economies to external shocks.

South-America is slowly recovering from the regional recession of 2002. The new administration in Brazil has reassured markets in pursuing prudent macroeconomic policies and promising to undertake further structural reforms. In Argentina, the real economy is showing signs of recovery, despite the political impasse. Other countries in the region display mixed performances, with growth picking up in Chile whereas Venezuela is facing a severe recession. In addition to the restoration of confidence in the region, a demand push from abroad, notably from OECD countries, would be important to strengthen the incipient economic recovery.

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