News brief– Q3 2013

OECD Observer

Carbon price warning—

©Mazzzur. Under licence from Shutterstock

The complete elimination of fossil fuel emissions to the atmosphere should be a target for the second half of the century, OECD Sectretary-General Angel Gurría said. In a lecture delivered at the London School of Economics in October, Mr Gurría said that a transformation of the global energy system is needed if countries hope to limit climate change. “We don’t need to see zero net emissions tomorrow, but we will need to be on the pathway”, he said.

A report Climate and carbon: Aligning prices and policies released for the event says governments need to ensure their policies can achieve climate goals, particularly with negotiations getting under way for a new international climate agreement in 2015. “There has to be progress on every front, but notably with respect to carbon pricing”, Mr Gurría insisted, and attacked subsidies aimed at the exploration, production and use of fossil fuels. The full speech, The climate challenge: achieving zero emissions, can be read at and at

–as water risks rise

Climate change exacerbates water risks too. By 2050 more than 40% of the world’s population will live under severe water stress, and nearly 20% could be exposed to floods. Assets at risk from floods could reach US$45 trillion by 2050. Water pollution is also increasing. Governments must address these challenges, Water Security for Better Lives says.

”We have been forewarned; there is no doubt these risks are increasing”, said OECD Secretary-General Angel Gurría, speaking at World Water Week in Stockholm in September.“We must now arm ourselves with risk management strategies that will prevent water shortages and pollution, and protect against the droughts and floods that are endangering human lives, ecosystems and economies.”



A moderate recovery is under way in the major advanced economies, the OECD’s latest interim assessment says. The euro area is out of recession, although output remains weak in some countries.

Leading indicators released in October pointed to growth picking up in the US, Japan and the EU, and a slight decline, though potentially returning to trend, in China. They also suggest a tentative positive change in Brazil, Russia and India. OECD composite leading indicators are based on the likes of order books, building permits and long-term interest rates, and have a good record in anticipating trends and turning points in economic activity.

OECD-wide inflation rose by 1.7% in the year to August 2013, compared with 2% in the year to July 2013. This slowdown in the annual rate of inflation mainly reflects a sharp deceleration in energy price inflation, to 1.7% in the year to August, compared with 4.5% in July. Food price inflation decreased slightly to 2.1% in the year to August, compared with 2.2% in July. Excluding food and energy, the OECD annual inflation rate was broadly stable at 1.6% in August.

Merchandise trade slowed in most major economies during the second quarter of 2013. Compared with the first quarter of 2013, the value of merchandise imports and exports for the total of G7 and BRICS countries decreased by 1.4% and 1.8%, respectively.

The OECD area’s unemployment rate stood at 7.9% in August 2013, unchanged from the previous month, meaning 47.8 million people out of work. The unemployment rate decreased by 0.1 percentage points to 7.3% in the US, while in Japan it increased by 0.3 percentage points to 4.1%. In the euro area, the unemployment rate remained at a high 12% in August, after having declined by 0.1 percentage point in July. The youth jobless rate remained stable at 16%.

The OECD area employment rate, meanwhile, was 0.1 percentage point higher than in the previous quarter. This was still 1.4 percentage points below the level recorded in the second quarter of 2008, the quarter preceding the start of the global financial crisis. It steadied in the US at 67.3% of working-age people, but rose to 73.3% in Germany and 71.5% in Japan. Employment increased for all population groups in the second quarter of 2013, though the rate for youth was still 0.2 percentage points lower than one year ago.

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Urgent reminder
The most shocking thing is that we are getting worse at finding cures. The number of drugs for brain disease is dropping to zero.

–Prof Henry Markram, “Search for dementia cure is fading fast”, The Times 19 October 2013

Europe’s illegal branch
"The European Union is the largest importer of timber worldwide. According to the World Wildlife Fund (WWF), up to 19% of that wood originates from illegal sources."

–Ulrike Haupt, in D+C monthly, October 2013; see

Equal consideration
"There’s good reason to think that women don’t want the sort of equality envisioned by government bureaucrats, academics and many feminist advocates, one imagined strictly by the numbers with the goal of 50-50 breakdown[...]Equality-by-numbers advocates should be thinking about women’s progress in terms of what women want, not what the spreadsheets say they should want."

–Kay Hymovitz, “Do women really want equality?” in Time, 4 September 2013

Tax flight
"Over the two days of the Saint Petersburg summit alone, €1.7 billion euros will flee to tax havens. That sum would be enough to finance half of Senegal’s budget for 2013."

–Oxfam France statement to G20 ahead of OECD-led accord on international tax evasion, 4 September 2013, reported widely (notably

Country roundup

Sweden is the second most generous member of the OECD’s Development Assistance Committee (DAC), which groups the world’s major donors. The country delivered US$5.24 billion in official development assistance (ODA) last year, or 0.99% of its gross national income (GNI). The DAC commended Sweden for budgeting to reach its 1% ODA/GNI target each year since its last peer review in a climate of global financial crisis.


According to the OECD FDI Regulatory Restrictiveness Index, Costa Rica’s legal regime for foreign direct investment is more open than the average for the 57 OECD and non-OECD countries covered by the index. The OECD Investment Policy Review of Costa Rica said that the country’s inflows of foreign direct investment have increased at an impressive pace, growing on average 13% per year over the past decade.

England should expand the provision of post-secondary vocational training in order to meet the changing needs of students and employers, according to a new OECD report. Skills Beyond School: England says that although England has a large and successful university system offering three year bachelor degrees, more people should pursue shorter vocational programmes of one to two years at the post-secondary level.

Ireland’s economy is now showing encouraging signs of recovery from the financial crisis, but more must be done to reinvigorate growth and create the jobs that will get the country back to full health, according to the OECD’s latest Economic Survey of Ireland and a new report: Local Job Creation: How Employment and Training Agencies Can Help. While the unemployment rate recently began to decline, joblessness remains a serious concern, with over 13% of the labour force unemployed.

In October, Switzerland became the 58th country to sign the Multilateral Convention on Mutual Administrative Assistance in Tax Matters. China also signed the Convention at a ceremony at the OECD in August. All G20 countries have now fulfilled the commitment they made at the Cannes G20 Summit to sign the Convention and move towards automatic exchange of information as the new, global standard.  

Know finance

People need a better understanding of financial issues to improve well-being and economic stability, a report argues. “Advancing National Strategies for Financial Education” issued at the G20 in Saint Petersburg, shows that financial literacy is low among consumers, with people in surveys admitting to feeling lost when it comes to pensions and other financial products. Some 16 countries are implementing or designing strategies for financial education, including school programmes, along the lines of OECD principles and its International Network on Financial Education, the report says.

Farm support rises
Government support for agriculture in the world’s leading farming nations rose during 2012, bucking a long-term downward trend and reversing historic lows recorded in 2011; public support to producers stood at an average one-sixth of gross farm receipts in the 47 countries covered in OECD Agricultural Policy: Monitoring and Evaluation 2013.

Global value chains matter
Success in international markets depends on the capacity to import high-quality inputs as much on the capacity to export, says Implication of Global Value Chains for Trade, Investment, Development and Jobs, from the OECD, the WTO and UNCTAD. The report says that intermediate inputs account for over two-thirds of the goods and 70% of the services traded worldwide.

Plus ça change…

While there are a limited number of lessdeveloped countries with an impressive private enterprise sector(…), in general both public and private resources are poorly managed and development possibilities frequently neglected. Unfortunately there do not appear to be any simple or speedy devices for meeting this deficiency locally.

Sherwood Fine, from “Economic growth in the less-developed countries” Issue No 5, August 1963

©OECD Observer No 296, Q3 2013

Economic data


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