Employment in OECD countries has finally caught up and passed 2008 pre-crisis figures with 67.6% of the working-age population now with jobs, according to the latest OECD employment numbers. 

After an extended period of relatively strong growth, the countries of Eurasia have recently experienced a series of powerful external economic shocks.* Lower global commodity prices, recession in Russia, moderate growth in China and subdued economic prospects in many west European economies have all hit Eurasia hard. The region’s overall GDP fell in 2015 for only the second time in two decades (the first time was in 2009), and growth in 2016 was weak, according to IMF estimates, with accelerations in a few countries offset by downturns elsewhere. The recovery seems to have continued into 2017 but it is uneven and modest at best, and growth is far below the rates achieved in the 2000s.

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With new business models emerging, competition in the electricity sector is beginning to stir.

The rise of the digital economy has led numerous markets to experience radical innovation in business models. This has shaken incumbent firms and benefited consumers. Electricity is no exception, with green and distributed generators located in the workplace and home already posing existential threats to traditional mass supply-based businesses. And now a variety of new business models are emerging to disrupt retail too. With innovation needed to deliver on commitments to combat climate change and address fuel poverty, radical innovation in the electricity sector holds promising potential. 

Who would have guessed just a decade ago that trade and investment policies would emerge today as one of the most contested fields in OECD countries? We’ve had protests about globalisation before, but this time it seems different. As Martin Wolf wrote in the Financial Times, “The era of globalisation under a US-led order is drawing to a close… The question is whether protectionism and conflict will define the next phase”.

OECD Secretary-General Angel Gurría, left, discusses the OECD Economic Survey of Japan with Japanese Prime Minister Shinzo Abe, Tokyo, 13 April 2017 ©Shizuo Kambayashi/Pool/REUTERS

The Japanese economy has gained momentum, with “Abenomics” playing a key role in the country’s economic revival. But the latest OECD Economic Survey of Japan warns that more needs to be done to underpin inclusive growth, productivity and well-being amid pressures from high and rising government debt and a shrinking workforce.

Employment rates have been rising in several OECD countries, but productivity has not kept up. Indeed, a slowdown of productivity growth in the past years continued to undermine rises in economic output and living standards. Labour productivity among the G7 countries was highest in the US where the level of GDP per hour worked was US$68.3 in 2015, followed by France and Germany, while Canada and Japan had levels below the OECD average of $51.1.

©Dylan Martinez/REUTERS

Healthcare is not the only service feeling the effects of ageing populations. Pension systems are also under financial pressure, with policymakers in many countries struggling to find long-term solutions (see for instance www.oecd.org/pensions). We ask a range of experts: 

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As it enters the 13th Five-Year Plan period (2016-20), the Chinese economy continues to grow fast by international standards. While growth is slowing gradually, GDP per capita remains on course to almost double between 2010 and 2020. As a result, the Chinese economy will remain the major driver of global growth for the foreseeable future. 

Is there such a thing as a right amount of health spending? In an ideal world, this would likely mean spending that achieves effective healthcare services, with good outcomes for patients, the right number of professionals with the right skills, and delivers good value for tax payers with little, if any, wastage. Finding that balance is a difficult challenge. 

This year’s OECD Forum coincides with the celebration of the 20th anniversary of the Beijing Declaration, which was an important milestone to promote gender equality worldwide. Much has been achieved since 1995, but unfortunately, a lot remains to be done to close the gender gap and increase women’s participation in our economies and societies.

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Reconciling work and family commitments is a challenge in every country, but particularly for Japanese men and women. Much more so than in most other OECD countries, men and women have to choose between babies and bosses: men choose bosses, women less so, but on the whole there are very few babies and there is too little female employment. These shortcomings are increasingly coming to the fore and will have to be addressed.

Only a fine performance: Actress Judy Davis in the 1979 film adaptation of My Brilliant Career © AFP/Kobal/The Picture Desk

“I am only a woman!” declares Sybylla Melvyn with deliberate irony, in the Australian classic novel, My Brilliant Career. When Miles Franklin wrote the novel in 1901, aged just 19, she was embarking on her own career path, and though successful, like Sybylla, she encountered many social, economic and cultural hurdles along the way.

©Amir Cohen/REUTERS

Inclusiveness should be a prime objective of growth-oriented policies, alongside productivity and employment, Going for Growth 2017 argues. 

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Now is an opportune time to deploy effective fiscal initiatives and promote inclusive trade policies.

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Recent years have seen a rapid rise in digital transactions, notably through web-based “sharing economy” platforms that have bridged, and indeed blurred, the gap between consumers and producers. But this upsurge has also created new challenges for measuring GDP, and, against a backdrop of slowing rates of productivity growth, has led some to question whether the slowdown reflects these new transactions.

The country snapshots below are extracted from OECD Economic Outlook No 100, November 2016. For details and updates, visit www.oecd.org/oecdeconomicoutlook.

©Thomas Peter/Reuters

Since the 1970s, economic growth in Korea has largely been driven by big companies such as Samsung, Hyundai and LG. These so-called chaebol have been remarkably successful, but have dominated the economy, with little room for small and medium-sized businesses (SME) to gain traction and grow. 

Economic growth is projected to rebound strongly in 2017 and 2018 as the impact of recent reforms and changes in economic policy start to gain traction. Inflation remains high but it will gradually decrease towards the central bank’s target owing to widening economic slack and as the effect of administrative price increases and past currency depreciation wear off. Stronger growth will reduce unemployment from its current rate of 8.5%. 

Economic growth is projected to pick up to 3% by 2018. The decline in resource-sector investment will tail off and the non-resource sector will be supported by a steady increase in household consumption and investment as wages and employment rise. Further falls in unemployment will help reduce inequality and are not expected to generate strong inflationary pressures. 

After four years of disappointing growth, economic activity picked up in 2016. It has been supported by a fiscal reform that boosted household disposable income, a catch-up of investment and solid job creation, especially among elderly, women and immigrants. These factors will continue to support growth in 2017 and, to a lesser extent, in 2018.

Economic growth is projected to rise only slightly over the next two years. Sluggish real wage growth will hold back private consumption, although lower taxation of labour will support employment. Investment is moderate, despite high profit margins and favourable financial conditions. Consumer price inflation is projected to be stable at under 2%.

The economy is emerging from a severe and protracted recession. Political uncertainty has diminished, consumer and business confidence are rising and investment has strengthened. However, unemployment is projected to continue rising until 2017 and decline only gradually thereafter. Inflation will gradually return into the target range. 

Economic growth is projected to increase to 2.3% in 2018. As contraction in the resources sector slows, activity in the rest of the economy is projected to strengthen. Non-energy exports should continue to benefit from stronger export market growth and earlier exchange rate depreciation. Consumer price inflation should pick up to around 2% as the effect of falling energy prices fades and excess capacity is gradually eliminated. 

Economic growth moderated in 2016, reflecting weaker commodity prices and external demand, while consumer and business confidence have been fragile. Growth is projected to edge up in 2017 and 2018 as a somewhat stronger global economy underpins a gradual recovery in investment and private consumption. As the effects of past currency depreciation wear off, inflation will fall into the central bank’s tolerance range. 

Economic growth is being supported by stimulus, but is set to edge down further to 6.1% by 2018. At the same time, risks are rising. The economy is undergoing transitions on several fronts. Private investment will be reinvigorated by the removal of entry restrictions in some service industries, but held back by adjustment in several heavy industries. Housing prices are again rising fast in the bigger cities, but working off housing inventories in smaller cities will take time. Consumption growth is set to hold up, especially as incomes rise and urbanisation continues. Reductions in excess capacity will ease downward pressure on producer prices but consumer price inflation will remain low. Import demand for goods will be damped by on-shoring, while services imports, in particular tourism, will grow rapidly. Exports will be held back by weak global demand and loss of competitiveness. 

Economic growth is projected to pick up in 2017 and 2018, driven by stronger external demand and a recovery in agriculture following the end of El Niño. The current account deficit remains high, but is projected to narrow gradually as the sharp peso depreciation contains imports and spurs non-traditional exports. Inequalities remain high despite a slight decline in unemployment. 

The economy is projected to continue to expand at a strong pace. Growth will be driven by robust household consumption and increased exports due to stronger demand in the US. Investment will be led by public infrastructure planned in the coming years. Inflation is starting to pick up and will return to the central bank’s target range of 2-4% at the end of 2016. 

Stable economic growth is projected for 2017 and 2018. Solid labour demand will push unemployment towards its lowest rate in the last two decades, supporting consumption. Investment was cut sharply in 2016 due to the transition in EU funding programmes, but is projected to rebound in 2017. Rising cost pressures will push consumer price inflation to the 2% target during 2017.

Economic growth is projected to gradually strengthen to 1.9% in 2018 fuelled by investment and exports. Household consumption growth will remain robust, backed by employment growth, higher real wages and rising property prices. Both residential and business investment will pick up due to low interest rates and increasing capacity utilisation. The current account surplus will remain sizeable. 

GDP growth is projected to gain momentum in 2017 and reach 2.9% in 2018, mainly driven by domestic demand. Private consumption will remain robust and public investment will pick up, sustained by EU funds. Despite a favourable business environment and good financing conditions, private investment will recover only slowly. Exports will strengthen backed by increasing external demand. However, maintaining price competitiveness will be challenging due to increasing labour costs.

Economic data

GDP growth: +0.6% Q3 2017 year-on-year
Consumer price inflation: 2.3% Sept 2017 annual
Trade: +4.3% exp, +4.3% imp, Q3 2017
Unemployment: 5.7% Sept 2017
Last update: 14 Nov 2017

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