A sharp slowdown in emerging market economies and world trade has weakened global growth to around 2.9% this year, the OECD said in November. This is well below the long-run average. Deep recessions have affected Brazil and Russia, while the slowdown in China has increased financial market uncertainty in the near term. Global trade growth has slowed markedly, especially in the emerging market economies.
In its latest biannual Economic Outlook, 9 November, the OECD projects a gradual strengthening of global growth in 2016 and 2017 to an annual 3.3% and 3.6%. However, a clear pickup in activity requires a smooth rebalancing of activity in China and more robust investment in advanced economies. The slowdown in global trade and the continuing weakness in investment are deeply concerning, the OECD said.
In a step forward to improve the resilience of tax systems, the final package of Base Erosion and Profit Shifting (BEPS) measures was endorsed by all G20 finance ministers in Lima on 9 October. They agreed to forward BEPS measures for discussion and action by G20 leaders during their annual summit in Antalya, Turkey, on 15-16 November.
The G20 finance ministers expressed strong support for the OECD/G20 BEPS project, which provides governments with solutions for closing the gaps in international rules that allow corporate profits to disappear, or be artificially shifted to low-tax environments, where little or no economic activity takes place. Reforms to the international tax system include new minimum standards on country-by-country reporting, treaty shopping and mutual agreement procedures.
Pharmaceutical spending reached around US$800 billion across OECD countries in 2013, according to the latest Health at a Glance report. The growth of retail pharmaceutical spending has slowed recently in most OECD countries, thanks to policies boosting the generic market. Depression may be a driver of drug spending growth, with the consumption of antidepressants nearly doubling on average across OECD countries since 2000.
Many of you have worried that Canada has lost its compassionate and constructive voice in the world over the past 10 years. Well, I have a simple message for you: on behalf of 35 million Canadians, we’re back. Justin Trudeau, Prime Minister Delegate of Canada, Ottawa rally, 20 October
Climate and planet
The longer we wait, the costlier and more difficult it will be for us–and our children and grandchildren–to protect the planet. Jim Yong Kim, President, World Bank Group, Project Syndicate, 21 October
The narrative that we are being given is that the world has changed, and that it is time to expand the pool of so-called donors of climate aid and to narrow the list of eligible developing countries to receive support.
Nozipho Mxakato-Diseko, South African ambassador and leader of the G77 and China group at Bonn Climate Change Conference, Politico, 26 October
Greece can guard its borders perfectly and has been doing so for thousands of years, but against its enemies. The refugees are not our enemies.
Yiannis Mouzalas, Greece’s migration minister, Wall Street Journal, 25 October
Real GDP in the OECD area grew by 0.5% in the second quarter of 2015, the same rate as the previous quarter. Private consumption was the main contributor, with 0.3 percentage points. Growth rebounded to 1% in the US, following 0.2% in the previous quarter, and remained relatively strong in the UK at 0.7%. Growth contracted by 0.3% in Japan and 0.1% in Canada, while remaining flat in France. In the EU growth remained stable at 0.5%.
OECD-area inflation slowed to 0.4% in the year to September 2015, down from 0.6% in the year to August, as energy prices continued to fall. Excluding food and energy, the OECD annual inflation rate picked up marginally to 1.8% in September compared with 1.7% in August.
Unit labour costs in the OECD area grew at a steady 0.1% in the second quarter of 2015. In the US, labour costs slowed from 0.5% to 0.1% quarter-on-quarter, while rising by 1.4% in the UK and 0.4% in Japan.
The unemployment rate in the OECD area was stable at 6.7% in September 2015, 1.4 percentage points below the January 2013 peak. Some 40.9 million people were out of work, 8.0 million less than in January 2013, but still 6.4 million more than in July 2008, before the crisis. The unemployment rate fell by 0.1 percentage points in the euro area, its lowest level since January 2012, and was stable in Japan and the US at 3.4% and 5.1% respectively.
Meanwhile, the OECD area employment rate (people of working age in employment) remained stable at 66.1% in the second quarter of 2015, 0.4 percentage points below the level recorded in the second quarter of 2008.
For latest updates on economic statistics, see www.oecd.org/std/statisticsnews releases.htm
While Korea has seen strong economic growth over the past decades, its future depends on improving relevance of education and skills to labour market, a new OECD report finds. www.oecd.org/korea
Brazil has made remarkable social and economic progress in the past two decades, but must now overcome important challenges to put its economy on a stronger, fairer, greener growth trajectory, according to two new OECD reports. www.oecd.org/brazil
Promoting longer working lives would help Denmark meet the challenges of its rapidly ageing population, according to a new OECD report. www.oecd.org/denmark
Colombia needs to improve its capacity to investigate foreign bribery by establishing an effective corporate liability regime, improving co-ordination among its numerous agencies and more rigorously training law enforcement, a new OECD report says. www.oecd.org/countries/colombia
Improvements in health, access to basic services and housing have contributed to raising standards of living in Mexico over the past 15 years, though further advances are needed to get closer to the OECD average. www.oecd.org/mexico
Austria should do more to help people with frequent mental health problems fi nd a job or stay in the workplace. www.oecd.org/austria
Viet Nam has made remarkable agricultural progress, the OECD Review of Agricultural Policies in Viet Nam says. www.oecd.org/countries/Vietnam
Spain’s future prosperity depends on raising people’s skills and removing barriers to innovation and employment, according to a new OECD report. www.oecd.org/spain
The positive effects expected from the Macron Law show that France must pursue its structural reform initiatives, OECD says. www.oecd.org/france
The end of the mining boom has highlighted the urgent need for Chile to diversify its economy away from commodity-intensive sectors www.oecd.org/chile
Germany’s former Chancellor Helmut Schmidt, who died aged 96 on 10 November, jokes with the late Margaret Thatcher, on a visit to the British prime minister in London, 1979. Chancellor Schmidt, who was a member of the Social Democratic Party (SPD), was an ardent European and supporter of international co-operation. As federal minister for finance Helmut Schmidt participated in the 12th OECD Ministerial Council Meeting, 6-8 June of 1973.
©AFP/DPA/DPA Picture Alliance
Child poverty: Life satisfaction, reading and problem-solving skills, communication with parents and peers, and intention to vote in national elections in later life are lower among children from less well-off families, the latest edition of How’s Life shows. They are also more likely to be bullied at school.
Cuts to R&D spending threaten to destabilise science and research systems in many advanced economies, a new report warns. The OECD Science, Technology and Industry Scoreboard 2015 says countries should step up their investment in long-term R&D, to reshape industry and health care, and provide solutions to climate change.
Business and government leaders should treat digital security as an economic risk rather than a technical issue, according to a new OECD recommendation to member countries.
So long as goods such as pure air, unpolluted water and amenities derived from nature or a pleasant environment were regarded as “free” goods belonging outside the economic sphere, it was quite legitimate not to account for them. Today an altogether different situation has arisen–to make these goods less scarce is to add to the world’s assets and to increase human satisfaction.
“The need for intergovernmental co-operation and co-ordination regarding the environment” in Issue No 50, February 1971
©OECD Observer No 304 November 2015