News brief - July 2010

Health spending rises; Round up; Soundbites; Benvenuto!; Economy; Food speculation question; Chinese flexibility welcomed; Slovenia joins the OECD; Plus ça change...

Health spending rises 
Round up
Soundbites
Benvenuto !
Economy
Food speculation question
Chinese flexibility welcomed
Slovenia joins the OECD
Plus ça change...




Health spending rises

Spending on healthcare is rising faster than economic growth in all OECD countries, the latest Health Data report says. Health spending rose from 7.8% of GDP in 2000 to 9% in 2008, according to the OECD Health Data 2010, the most comprehensive source of comparable statistics on health and health systems across OECD countries. Population ageing, technological advances and demand for ever better healthcare will continue to drive costs higher in the future. In some countries the sharp rise in the ratio of health spending to GDP reflects the economic downturn, since healthcare costs did not fall with declining GDP. In Ireland, the percentage of GDP devoted to health increased from 7.5% in 2007 to 8.7% in 2008. In Spain, it rose from 8.4% to 9%. The United States spent $7,538 per person on health in 2008, well over double the $3,000 average of all OECD countries. The next biggest spenders, Norway and Switzerland, spent much less than the U.S. per capita but still some 50% more than the OECD average. The share of overall government spending devoted to healthcare rose from an average of 12% in 1990 to 16% by 2008. The OECD warns that many governments will have to curb the growth in public spending on health if they want to maintain their current healthcare systems during the crisis and prepare for such challenges as ageing. Order OECD Health Data 2010 at www.oecd.org/health 


Round up

Ending fossil fuel subsidies could cut global greenhouse gas emissions by 10% from the levels they would otherwise reach in 2050 under a “business as usual” scenario, according to new OECD analyses based on data from the International Energy Agency.

Emerging markets are likely to account for nearly 60% of world GDP by 2030, according to analysis based on work by late economic historian, Angus Maddison, which also suggests that the aggregate economic weight of developing and emerging economies is set to surpass that of the so-called developed world. The world produces enough to feed its growing population, but recent price spikes and the economic crisis have contributed to a rise in hunger and food insecurity, the latest annual joint report from the OECD and the UN Food and Agriculture Organization (FAO) says.

Meanwhile, government support to farmers in OECD countries rose by a percentage point to 22% of total farm receipts in 2009, reversing a declining trend in state support since 2004, according to a recent report. The producer support estimate (PSE) rose to around $252.5 billion. One country to buck this trend is Israel, where government support to farmers fell from 24% of total farm receipts in the mid 1990s to 17% in 2008. Israel has recently been invited to join the OECD. See www.oecd.org/israel 

The OECD’s Development Assistance Committee gave high marks to the UK’s development effort in a recent review. Top political support and strong co-operation between government departments over the last decade have helped the UK to promote its international development agenda, the DAC review said. UK aid was $11.5 billion in 2009, representing 0.52% of its gross national income (GNI). For more, see www.oecd.org/dac 

Brazil and Indonesia have substantially implemented the OECD’s internationally agreed tax standard, according the Global Forum on Transparency and Exchange of Information for Tax Purposes. The two countries joined the Global Forum in September 2009. See www.oecd.org/tax 

Visit the newsroom at www.oecd.org/media 


Soundbites 

Fact and fiction

“You have to distinguish between those markets associated with real activity, such as trading commodities, and fictitious markets, such as derivatives, which are just casinos.”

Jacques Attali, economist and economic advisor, in Le Monde, 22 May 2010.


Land of the rising precariat

“The precariat–the “precarious proletariat”, or workers without job security–have mushroomed in recent years.”

Machiko Osawa and Jeff Kingston, writing about Japan’s labour market, in Financial Times, 2 July 2010.


Economic tectonics

“The crisis has revealed deep faults within western economies and the global economy as a whole. We may be unable to avoid further earthquakes.”

Martin Wolf, Financial Times, 14 July 2010


Benvenuto !

Silvio Berlusconi, prime minister of Italy and chair of the 2010 OECD Ministerial Council Meeting, greets Felipe Larraín, finance minister of Chile, one of the OECD’s newest members (see www.oecd.org/chile and last edition). A public ceremony to invite Estonia, Israel and Slovenia to join the organisation was held in the context of this year’s ministerial meeting. See www.oecd.org/accession 




Economy

An easing in the pace of expansion in most OECD countries may be in store, according to latest leading indicators. The indicators, which include order books, building permits and long-term interest rates, increased by 0.1 points in May 2010, slightly lower than the outturn for April, making it the tenth consecutive month of deceleration.

There are tentative signs of a peak in Brazil, with stronger evidence of a peak emerging in France and Italy. Leading indicators for Japan, the US and Germany reveal that the ongoing expansion in activity is likely to be maintained, but possibly at a slower pace. In China, OECD leading indicators have pointed to the possibility of a slowdown since December 2009.



GDP in the OECD area grew for the fourth consecutive quarter, with an increase of 0.6% in the first quarter of 2010 compared with the previous period, driven mainly by stockbuilding. GDP grew strongly in the US and Japan, by 0.7% and 1.2% respectively, but slowed in the euro area to 0.2%. Italy returned to positive GDP growth with an increase of 0.5% in the first quarter after a small decline in the previous quarter, while the pace of the recovery eased in both France and the UK, and was unchanged in Germany.

Unemployment in the OECD area slid in May 2010 to 8.6%, a percentage point lower than in April.

Consumer prices in the OECD area rose by 2% in the year to May 2010, slightly down from 2.1% in April. This trend reflected the dip in energy inflation, which increased by 11% in May, compared with 12.1% in April. Food prices rose by 0.5% in the year to May 2010, the third consecutive monthly increase.

Exports from G7 countries grew 3.9% quarter-on-quarter, and imports were up 3.1% in the fourth quarter of 2009.


Food speculation question

The popular view that financial market speculation caused a price bubble in agricultural futures markets in 2007-08 has been questioned by findings in a preliminary study prepared by two US academics for the OECD. Professors Scott Irwin, of the University of Illinois, and Dwight Sanders, of the University of Southern Illinois, found an increase in the amount of money flowing into commodity index funds in 2006-2008. Although this reflected a shift, as index fund investors entered agricultural commodities futures, there was no direct statistical link between their involvement and price volatility, the study argues. OECD experts are anxious that regulators do not unintentionally deprive futures markets of liquidity by tightening up rules on futures funds. They cite a range of market factors and policy actions to explain the food price spikes in 2007-08, including supply shortfalls, depleted global stocks and an upswing in demand for food, feed and biofuels, alongside relatively high oil prices. Policies such as export restrictions also played a role. But some business analysts and civil society groups maintain that speculation helped cause the food price bubble. For more on this issue, see www.oecd.org/agriculture 


Chinese flexibility welcomed

China’s announcement in June that it would introduce more flexibility into its exchange rate policy was welcomed by OECD Secretary-General Angel Gurría, who said that, together with sustained fiscal expansion structural reform, exchange rate flexibility should contribute to achieving strong, sustained and balanced growth in the world economy. Some experts contend that China’s currency, the renminbi, has been undervalued, fuelling exports but keeping imports expensive. See www.oecd.org/china 


Slovenia joins the OECD

Slovenia became the 32nd member of the OECD on 21 July 2010. The country’s accession continues the OECD’s enlargement process. Slovenia was one of three candidate countries invited to join the organisation this spring, the other two being Estonia and Israel, both have which have now signed accession agreements. Talks continue with Russia, another candidate. In a recent interview with the OECD Observer, Slovenia’s finance minister, Franc Križanič looked forward to membership, saying that, though a small country, Slovenia had strong institutions and values, and would enrich the OECD’s development and reform agendas. For more information, visit www.oecd.org/slovenia and www.oecd.org/accession. See also www.oecdobserver.org 


Plus ça change...

“The current economic and social state of many young people falls far short of what is desirable. It is not just a “youth problem”. As long as total unemployment remains high, it is unrealistic to expect a significant improvement in youth job prospects.”

Extract from the “OECD Employment Outlook”, No 202, October/November 1996

©OECD Observer No 280 July 2010




Economic data

GDP growth: +0.6% Q4 2017 year-on-year
Consumer price inflation: 2.6% May 2018 annual
Trade: +2.7% exp, +3.0% imp, Q4 2017
Unemployment: 5.4% Mar 2018
Last update: 06 Jul 2018

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