News brief– March 2004 edition

Recovery more certain

Moderate to strong growth lies ahead in the OECD area, according to the latest composite leading indicators (CLIs), with a continued strong improvement in the United States in particular. The CLI for the OECD area rose by 0.8 points in December 2003 to 123.6 from 122.8 in November. Its six-month rate of change has also risen significantly since April 2003, following a decline that began in May 2002.

The CLI for the United States increased by a strong 1.6 points in December, and its six-month rate of change was also up substantially for the ninth consecutive month.

The CLI also rose in the euro area, up 0.3 points, but its six-month rate of change fell after seven months of increases. France’s CLI increased by 0.9 points in December and its six-month rate of change increased for the ninth month in a row. Germany also saw its CLI rise in December by 1.1 points, and its six-month rate of change has shown strong increases over the past eight months after 11 months of declines. But Italy’s CLI fell a marked 1.5 points in December and its six-month rate of change was down sharply.

Elsewhere, Japan saw its CLI rise by 0.2 points in December, but the six-month rate of change was down for the second month in a row, after six months of increases. The leading indicator for the UK rose by 0.8 points in December and its six month rate of change was also up for the ninth consecutive month. Canada showed a sharper rise, with its CLI up a strong 1.7 points in December and its six-month rate of change higher for the eighth consecutive month.

The OECD’s composite leading indicators cover a wide range of key short-term economic indicators and are designed to provide early signals of turning points (peaks and troughs) in economic activity. More information on OECD composite leading indicators can be found at

Nauru off tax haven list

The world’s smallest independent republic, Nauru, a state in the Pacific, has been taken off the OECD’s list of uncooperative tax havens.

The move in December 2003 came after Nauru pledged to improve transparency and establish effective exchange of information for tax matters with OECD countries by the end of 2005.

In a letter detailing the commitment, Nauru President Rene R. Harris noted that the commitments would have “significant adverse cost and revenue implications on the small economy of Nauru”.

He hoped that OECD governments and other international organizations would take these into account when determining development assistance.

Nauru is the second country to be removed from an OECD list of uncooperative tax havens published in April 2002. Vanuatu was taken off the list in May 2003. Five jurisdictions remain on the list: Andorra, Liberia, Liechtenstein, the Marshall Islands and Monaco. The OECD hopes these jurisdictions will make similar commitments.

For more on the OECD’s work on harmful tax practices, see:

Pollution poll

Which environmental problem do you think is the most urgent? This question has been running as an electronic opinion poll at since 6 February 2004. At the time of going to press, some 700 responses had been received: 39% chose pollution, 24% climate change, 13% urban congestion or sprawl and 24% biodiversity and deforestation. Readers can vote on the OECD Observer opinion poll, which is purely indicative and not scientific in its sample. The poll will remain open until 21 April, when the OECD Environment Ministers meeting ends.

Public comment on OECD Principles

Partnerships for better policy-making was given another boost when more than 70 individuals and national and international organisations from around the world took up an invitation to comment on a draft revision of the OECD Principles of Corporate Governance. The window for comments was about six weeks. OECD governments had asked for the principles, originally adopted in 1999, to be reinforced in response to recent corporate boardroom and other scandals.

Comments were submitted by such names as Standard and Poor’s, the International Corporate Governance Network, the International Federation of Accountants, businesses such as Nike and Reuters, and civil society groups such as the International Federation of Human Rights, who wished the text to define “stakeholders” more clearly, and to see governance “beyond merely addressing the articulation between shareholders and managers”.

The Institute of Internal Auditors (UK and Ireland) welcomed the review, though wished to emphasise the importance of internal audit and risk management. The Business and Industry Advisory Committee to the OECD (BIAC, see page 18), representing the 38 main business federations in OECD member countries, urged governments to sustain the notion that “one size does not fit all” in corporate governance standards. Meanwhile, several national and international labour organisations criticised the draft, with the Trade Union Advisory Committee to the OECD (TUAC) arguing that it did not address workers’ rights to participate in the corporate governance framework, nor promote the idea of responsible long-term shareholders. (For comments, see link below.)

The OECD will use the public comments, as well as feedback from consultations with governments and civil society in both OECD and non-OECD countries over the past year, to reinforce the Principles of Corporate Governance as a global reference for improving behaviour in the boardroom. Subsequent versions will also take into account comments by members of the OECD Steering Group Corporate Governance. OECD ministers are expected to adopt the final text at their annual summit meeting in Paris on 13-14 May.

For the full text of the draft revision and the public comments, see:

Ukraine, Egypt make progress

The Financial Action Task Force (FATF), the international body in charge of safeguarding the global financial system against money laundering and terrorist financing, has taken Ukraine and Egypt off its list of non-cooperative countries and territories (NCCTs), citing substantial progress by both.

“This is evidence that the NCCT process working and countries are taking substantive action to clean up their financial systems,” said FATF president Claes Norgren on 29 February after an FATF plenary meeting decided on the move.

There are now seven countries on the list non-cooperative countries and territories: Cook Islands, Guatemala, Indonesia, Myanmar, Nauru, Nigeria and the Philippines. Financial institutions in FATF countries are asked to give special attention to businesses and transactions with persons, including companies and financial institutions, in these listed countries or territories. The FATF welcomed further progress by several jurisdictions on the list, notably Guatemala, which has recently brought its offshore banks into the supervisory framework.

The FATF also welcomed the successful conclusion of a 12-month pilot programme with the IMF and the World Bank in which the two institutions have used the FATF’s recommendations to counter money laundering and terrorist financing.

A seminar before the FATF plenary meeting, attended by 44 countries, agreed that the international community must improve mechanisms to collect and share information on terrorism financing.

The FATF is an independent intergovernmental body whose secretariat based at the OECD. For more on the work of the FATF see

Jobless rate lower

The unemployment rate in the OECD area fell in December to 6.9% from 7.0% in November and 7.1% a year earlier, with Italy showing a 0.5 percentage point drop over the 12 months. The Italian jobless rate was 8.4% in October (the latest figure available), above the OECD average but down from 8.9% a year earlier, while the UK standardized unemployment rate fell 0.2 percentage points from a year earlier to 4.9% in October.

In the euro area, the jobless rate rose 0.2% in December from a year earlier to 8.8%. The sharp fall in the Italian jobless rate was offset by increases in France, up to 9.5% from 9.1% a year earlier, and in Germany, where the rate rose to 9.2% from 9.0%.

Unemployment fell in the US and Japan in December. The US jobless rate fell 0.3 percentage points from a year earlier to 5.7%, while Japan showed a 0.6 percentage point fall to 4.9% from 5.5% in December 2002.

For the unemployment rates for all OECD countries, see

©OECD Observer No 242, March 2004 

Economic data


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