News– December 2004-January 2005

GDP growth eases

Economic growth in the OECD area rose by 0.6% in the third quarter of 2004, showing little change compared with growth of 0.7% in the previous quarter, according to preliminary estimates. Annual growth domestic product slowed to 3.3%, from 3.8% in the second quarter of 2004.

GDP in the euro area rose by 0.3% in the third quarter, slowing from 0.5% growth in the preceding quarter. Annual growth was also weaker (1.8%) than in the second quarter of 2004 (2.1%). In the G7 countries, quarterly GDP growth in the third quarter of 2004 varied from 0.1% in France, Germany and Japan to 1.0% in the US. Quarterly growth accelerated slightly in Japan and the US, was stable in Italy and slowed in the other G7 countries. Annual growth was weaker than in the preceding quarter in all G7 countries except Italy and Canada. The US (4.0%) and Canada (3.3%) had the highest annual growth rates in the G7, while Germany (1.3%) and Italy (1.3%) had the lowest.

and challenges ahead

Growth is set to slow in the months ahead, to judge by the latest OECD leading indicator. October data showed continued weakening performance for the US, Canada, Japan and Germany. However some evidence of improved performance was shown for Italy and the UK.

According to the composite leading indicator, the OECD area fell by 0.1 point from September to October 2004. Its six-month rate of change was down for the ninth month in a row, following an upward trend which began in April 2003. The leading indicator for the US, Canada, Japan and Germany decreased in October and their sixmonth rate of change fell sharply for several months in a row. On the other hand, the indicator for the UK and for Italy increased by 0.5 point in October and their six-month rate of change was up for the second time following a downward trend. The euro area’s indicator rose too, by 0.2 point in October, though its six-month rate of change has shown a downward trend since December 2003.

Nevertheless, OECD experts urge cautious optimism for 2005-2006 with the chief economist, Jean-Philippe Cotis, expecting OECD economies to achieve good growth.

See “Cautious optimism” by Jean-Philippe Cotis, in OECD Observer No. 245, November 2004.

G7 trade slows

Total merchandise export volumes in G7 countries almost stagnated in the third quarter of 2004, with a 0.5% rise, while import growth slowed to 1.8%. On a year-to-year basis, G7 trade export volume growth was still strong, but had slowed to 9.2%, while import volumes continued their upward trend with a rise of 11.3%.

For the first time in five quarters, Germany’s merchandise export growth turned negative (-1.1%). Imports rose by 2.6%. On a year-to-year basis, German export volumes rose by 8.9% and imports by 11.3%.

In the US, merchandise trade exports grew faster than the G7 average at 2.3% in the third quarter compared with the previous quarter. However, import volume growth slowed to 1.2%. Compared to a year earlier, merchandise export volumes rose by 10.1%, while imports have increased by12.2%.

Quarter-to-quarter volume growth of Japanese merchandise exports continued to contract and imports only slightly recovered, with a rise of 0.9%. Year-to-year export volume growth, however, continued to be strong with 12%, the highest rate of the G7 countries, while import volume growth, at 6.6%, was the lowest.

Plus ça change

“The rapidly growing disparity between the per capita GNP levels of the less-developed and more-developed nations cannot in the foreseeable future be significantly diminished. Given the existing income difference, even a doubling of current growth rates of the less-developed world would not begin significantly to narrow the great income gulf.”

From “Economic Growth in the Less-Developed Countries”, in OECD Observer No. 5, August 1963.

Secretary-General Johnston to step down

Donald J. Johnston, the secretary-general of the OECD, will step down from office in May 2006. A former lawyer, politician and cabinet minister in the Canadian government, Mr Johnston was elected to the post of OECD secretary-general in 1996. Mr Johnston advised member countries of his decision on 5 January 2005. In his letter (see link), Mr Johnston underlined the importance of sufficient preparation time for his successor in order to ensure a smooth transition. He commented that “a lengthy preparation period was very useful for me before I assumed my responsibilities as secretary-general of the OECD”.

Major price survey

The largest and most complex price collection survey ever undertaken has been launched by the International Comparison Program (ICP), housed in the World Bank’s Development Data Group. The ICP is coordinating the collection of price data, compilation of detailed expenditure estimates and calculation of purchasing power parities (PPPs) for countries in Africa, Asia Pacific, Latin America and the Caribbean, Central America, the Commonwealth of Independent States and Western Asia. Results will be combined with that of the OECD-Eurostat PPP programme to enable GDP comparisons of about 160 countries. ICP’s Fred Vogel said, “It will be a tremendous resource for all who have an interest in the global economy, including global businesses, economists and development agencies who might want to compare the relative price levels and national incomes (GDP per capita) of various countries.”

For more information, see

Mixed jobless rate picture

OECD unemployment stood at 6.8% from September to October 2004, which, though unchanged from the previous quarter, was 0.3 percentage point down on a year earlier.

In the euro area, the joblessness rate remained at 8.9% in October 2004, the same rate as a year earlier. The US unemployment rate for November 2004 fell to 5.4%, from 5.5% the previous month and 5.9% a year earlier. For Japan, the rate was 4.7% in October 2004, 0.1 percentage point higher than the previous month but 0.5 percentage point lower than in October 2003.

In Germany, the OECD unemployment rate remained at 9.9% in October 2004. In Canada, the rate increased from 7.1% the previous month to 7.3% in November 2004; but was however 0.2 percentage point lower than a year earlier. Joblessness declined from the previous year in France, the UK and in Italy, respectively to 9.5% in October, 4.9% in August and 8.9% in January 2004.

Steely outlook

Buoyant market conditions in steel are expected to continue in 2005-2006, according to industry and government experts meeting in January. Strong market has boosted financial performance in the sector and has sparked interest in new capacity, they said. The steel market was exceptionally buoyant in 2004: global steel consumption jumped by 8.8% over 2003 to reach some 935 million tonnes of finished products. In the OECD area, steel demand increased by 7.5%.

©OECD Observer No 246/247, December 2004-January 2005

Economic data

GDP growth: +0.6% Q1 2019 year-on-year
Consumer price inflation: 2.3% May 2019 annual
Trade: +0.4% exp, -1.2% imp, Q1 2019
Unemployment: 5.2% July 2019
Last update: 8 July 2019

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