Growth prospects have improved for the world’s major economies, as a result of lower oil prices and monetary easing, according to the OECD’s latest Interim Economic Assessment released on 18 March. The euro area is projected to grow at a 1.4% rate in 2015, and 2% in 2016, benefiting from the euro’s depreciation, cheaper oil and monetary stimulus. The US will expand 3.1% this year, while the UK will grow by 2.6% and Japan by 1%.
"There is no room for complacency, as excessive reliance on monetary policy alone is building up financial risks, while not yet reviving business investment", warned OECD Chief Economist Catherine L. Mann. She warned that low inflation and interest rates point to risks of financial instability, and that central bank action must be bolstered by fiscal and structural reforms.
As for emerging economies, while India is expected to be the fastest-growing major economy over the next two years, China will continue experiencing a gradual slowdown and Brazil is likely to fall into recession.
The next OECD Economic Outlook will be released on 3 June 2015.
Despite progress in recent decades to reduce gender gaps, girls and boys remain deeply divided in career choices, according to a new report. While boys are much more likely to underperform at schools than girls, fewer than 1 in 20 girls considers a career in science, technology, engineering or mathematics, compared to 1 in 5 boys. The report, The ABC of Gender Equality in Education: Aptitude, Behaviour and Confidence, finds that girls lack the same self-confidence as boys in these fields, and differences in parental encouragement exacerbate the problem. However, scientific careers are among the most highly paid. “What’s needed is neither extensive nor expensive education reform but a concerted effort by parents, teachers and employers”, said OECD Deputy Secretary-General Stefan Kapferer.
Lawn-term water planning
"In Nevada, Las Vegas has paid out $200 million over the last decade for homes and businesses to pull out their lawns. It will get worse."
–Eduardo Porter, International New York Times, 16 October 2014
“No more loans–not until we have a credible plan for growing the economy in order to repay those loans, help the middle class get back on its feet and address the hideous humanitarian crisis.”
–Yanis Varoufakis, finance minister of Greece, International New York Times, 16 February 2015
“An estimated 4.7 million British nationals are living abroad, mostly in Australia, the US and Canada.”
–Press Association, Daily Mail, 26 February 2015
Economic momentum continues upwards, according to the OECD composite leading indicators, which are based on the likes of order books, building permits and long-term interest rates. This is particularly true for the euro area, with stable growth indicated for most other major economies and the OECD area as a whole.
GDP growth in the OECD area slowed marginally to 0.5% in the fourth quarter of 2014, down from 0.6% in the previous quarter, with the strongest drop among G7 countries in the US and the UK, easing to 0.7% and 0.5% respectively.
Inflation slowed to an annual 0.5% in the OECD area in January 2015, down from 1.1% in December. This sharp decrease was caused by further falls in energy prices, which declined by 12% in the year to January, compared with a decline of 6.3% in December.
Unit labour costs in the OECD area rose by 0.5% in the fourth quarter of 2014. In the US, labour costs rose strongly by 0.8% but decreased in the euro area to 0.3%, and in Japan they slowed by 0.1%.
As for trade, total (seasonally adjusted) merchandise exports of the G7 and emerging markets fell by 3%, but this partly reflects the effects of an appreciating US dollar. Merchandise imports also fell by 3.7% in the fourth quarter of 2014 compared to the previous quarter, partly reflecting a continued fall in oil prices. In China exports grew slightly by 0.4% while imports fell by 2%.
The unemployment rate in the OECD area stood at 7% in January 2015. Some 43.1 million people were out of work, down slightly since December, and 6.5 million less than the peak in April 2010. The unemployment rate edged up by 0.3 percentage point to 6.6% in Australia and also rose by 0.1 percentage point to 5.7% in the US and by 0.2 percentage point to 3.6% in Japan. In the euro area, unemployment fell slightly, to 11.2%, including an 11th monthly fall in Ireland of 0.2 points.
For latest updates on economic statistics, see www.oecd.org/std/statisticsnewsreleases.htm.
Spain has made important progress in many aspects of its environmental performance since 2000, but there is ample room to apply more green taxes to spur cleaner economic growth, the latest Environmental Performance Review says. www.oecd.org/spain
The UK’s economy is projected to expand in 2015-16, but it must boost productivity and make future growth more inclusive, the latest OECD Economic Survey of the United Kingdom says. www.oecd.org/unitedkingdom
Reforms introduced in Italy should, if fully implemented, raise GDP by an additional 6% over 10 years, says the latest Economic Survey of Italy. www.oecd.org/italy
Belgium has returned to growth and continues scoring well on well-being, but reforms will be needed for fiscal sustainability and to promote employment and competitiveness, according to the OECD Economic Survey of Belgium. www.oecd.org/belgium
The underlying strengths of the Estonian economy have helped it bounce back from the crisis, but it needs to find a more inclusive and sustainable growth path, a new economic survey says. www.oecd.org/estonia
Japan could help laid-off workers find a job more quickly by improving co-ordination between public employment services and companies, and ensuring workers have adequate Employment Insurance (EI) benefits, according to a new OECD report. www.oecd.org/japan
Austria should set a time frame to increase its development aid budget towards the UN recommended goal of 0.7% of its gross national income (GNI), according to a development review. www.oecd.org/austria
Tunisia needs to prioritise youth employment and regional development to cement the democratic transition and secure prosperity, according to two new reports. www.oecd.org/countries/tunisia
Candidate for OECD membership, Colombia, needs a comprehensive tax reform to boost investment and diversify the economy, according to the latest OECD Economic Survey of Colombia. www.oecd.org/countries/colombia
Tax revenues in Latin America and Caribbean countries are considerably lower as a proportion of national incomes than in most OECD countries, according to the fourth edition of Revenue Statistics in Latin America and the Caribbean 1990-2013. www.oecd.org/dev/americas
Greek Prime Minister Alexis Tsipras visited the OECD on 12 March. The OECD and member country Greece will work more closely together to advance reforms in six main areas: boosting job creation, reducing the administrative burden on business, improving the efficiency of public finance and spending, instilling a culture of transparency and integrity, strengthening the tax system, and introducing more competition. Alexis Tsipras also delivered a keynote speech to OECD staff and guests. For more on the meeting, see http://oe.cd/W0
The international community continues to make major progress to end tax evasion, says the OECD. The Global Forum on Transparency and Exchange of Information for Tax Purposes especially welcomed Switzerland for its recent improvements towards greater tax transparency in a report published on 16 March. The OECD also welcomed the EU Commission Initiative on Tax Transparency presented on 18 March. "Change is happening and co-operation and transparency are replacing secrecy and harmful practices", OECD Secretary-General Angel Gurría said. www.oecd.org/tax
Around 30-40% of all sickness and disability cases among OECD countries are related to mental health problems, roughly equal to 3.5% of GDP in Europe, according to a new OECD report. Health and employment services should intervene earlier to help people with mental health issues find work or stay in their jobs, and not give into social stigma. www.oecd.org/employment
Water supplies for the growing populations of the world’s cities are increasingly threatened by various forms of man-induced pollution. Water pollution presents equally urgent problems.
"The fight against smog and water pollution" in Issue No 6, October 1963.
©OECD Observer No 302, April 2015