News brief Q3 2016

OECD backs G20 innovation drive

Leaders of the G20 countries meeting in Hangzhou, China from 3-5 September, endorsed a series of action plans to implement their growth strategies covering a broad swathe of policy areas: from innovation, skills and entrepreneurship to investment finance, tackling money laundering and combatting tax avoidance, an area which OECD Secretary-General Angel Gurría pointed out was already bearing fruit. The OECD is an active partner in the G20 and Mr Gurría congratulated China for putting innovation at the heart of the growth strategy. G20 leaders welcomed the OECD’s work on the measurement of the digital economy, committed to expand broadband access and investment in information and communications technologies, and urged countries to seize the opportunities of the New Industrial Revolution, while agreeing to strengthen co-operation and support workers affected by technological change. The OECD will facilitate a new G20 Task Force on Innovative Growth, said Gabriela Ramos, the OECD’s Chief of Staff and Sherpa to the G20, who also emphasised the organisation’s input to other key areas such as skills and training, investment in infrastructure, and small and medium-sized enterprises.

See www.oecd.org/g20/   


Education must do better

Achieving the UN Sustainable Development Goal (SDG) for education by 2030 will be a major challenge for all countries, the latest OECD Education at a Glance finds. The report, which measures countries’ efforts to achieve inclusive and equitable quality education, says that only 12 out of 35 OECD members are meeting the benchmark level for at least five of the ten SDG targets for education. Most countries have increased their investment in education in recent years: between 2008 and 2013, spending per student was 8% higher in 2013 than in 2008. But many young people have yet to see the benefit of this increased spending, as a sixth of 25-34 year-olds have no upper secondary education and inequalities make it harder to find a job.

See www.oecd.org/education/


Agricultural ambition needed

Governments need to implement more ambitious policies to address the global challenges facing agriculture, notably a shift away from direct support to farmers towards greater assistance for innovation systems that will improve productivity and sustainability. A new OECD report finds that support to producers in OECD countries has roughly halved in intensity over the past 30 years, and now amounts to 17% of gross farm receipts. However, more investment in people–education, skills and health services–and in strategic physical infrastructure and agricultural innovation systems is required.

See www.oecd.org/agriculture/    


Soundbites

Optimism–

Ultimately, perhaps, ongoing advances in artificial intelligence, robotics, Big Data, and other new technologies will push productivity onto a much higher growth path, generating a new leap in living standards and demonstrating that the pessimists were mistaken.

John Cassidy, The New Yorker, 10 August

–pessimism–

Globalisation’s future depends on better management. Will that happen? Alas, I am not optimistic.

Martin Wolf, Financial Times, 7 September

–defeatism

Very large firms pay [the taxes] they like where they like.

Headline, Libération (French daily newspaper), 7 September  


Economy

OECD leading indicators point to stable growth momentum in the OECD area as a whole, the US, Japan as well as the euro area. These composite indicators anticipate trends and turning points in the growth cycle, using data from the likes of order books, building permits and long-term interest rates. In Canada, China, Russia and Brazil, the composite leading indicators suggest growth is picking up, but weaker momentum in Italy.

Real GDP growth in the OECD area slowed slightly to 0.3% in the second quarter of 2016, down from 0.4% in the previous quarter. Growth slowed in most G7 economies, with the exception of the UK and the US, where growth picked up to 0.6% and 0.3%. Growth decelerated strongly in France, Germany and Italy.

OECD-area inflation slowed to 0.8% in July 2016, compared with 0.9% in the previous month. Excluding food and energy, annual inflation was broadly stable at 1.8% in July 2016.

The unemployment rate in the OECD area was stable for the second consecutive month at 6.3% in July 2016, 1.8 percentage points below the January 2013 peak. Some 39.1 million people were out of work, 9.9 million less than in January 2013, but still 6.4 million more than in April 2008. In the euro area, the unemployment rate was also stable at 10.1% for the fourth consecutive month, falling most in Spain and Italy, by 0.3 and 0.2 percentage points to 19.6% and 11.4% respectively, while increasing by 0.2 percentage points to 10.3% in France.

As for trade, total (seasonally adjusted) international merchandise trade of the G20 grew modestly in the second quarter of 2016, the first increase since early 2014, but remains significantly below post-crisis highs. Exports rose by 1.5% and imports by 2%, following seven and eight consecutive quarterly falls, and mirroring the rise in oil prices.   


Country roundup

Australia should improve the quality of vocational education and training to help young people into work, according to a new OECD report. www.oecd.org/australia/

The Netherlands should step up its policies to attract and retain highly skilled migrants to help address labour shortages and bolster its position as a knowledge-based economy. www.oecd.org/netherlands/

Denmark has long been a generous provider of development aid, especially to the neediest countries, and is known for giving high-quality and flexible support. However, it faces challenges from a reduction of its aid budget and fast-rising refugee costs, according to the latest DAC Peer Review of Denmark. www.oecd.org/denmark/

Chile has taken steps to address the rising environmental pressures from its rapid economic growth, strengthening its environmental institutions and introducing new instruments, including a carbon tax. It now needs to thoroughly implement policy measures to stem the threat to its land, air and water, the OECD’s second Environmental Performance Review of Chile warns. www.oecd.org/chile/

Turkey’s economy has proven remarkably resilient, though further action can be taken to raise productivity and advance the shift to a more balanced and sustainable growth path that will boost living standards for all, according to the latest OECD Economic Survey of Turkey. www.oecd.org/turkey/

France has improved its environmental performance over the last decade, by lowering greenhouse gas emissions, reducing some air pollutants and cutting its use of fresh water. Further effort will be needed to reduce pollution by nitrates and pesticides and meet ambitious renewable energy targets, according to the latest Environmental Performance Review of France. www.oecd.org/france/

Japan must make fighting international bribery a priority. www.oecd.org/japan/

Mexico has become a frontrunner in making government data publicly accessible, and must use this to foster innovation, according to a new OECD report. www.oecd.org/mexico/


Latvia is 35th OECD member country

Latvia deposited its instrument of accession to the OECD Convention on 1 July 2016, thereby becoming a full member of the organisation.

Visit www.oecd.org/latvia/    


Other stories

Labour markets are recovering but wage growth remains weak, according to the latest OECD Employment Outlook issued in July. With the global economy stuck in a low growth trap, better use of skills and structural reforms to unblock activity are needed to boost productivity, support job creation, improve job satisfaction and raise living standards.

See www.oecd.org/employment/  

Poor skills severely reduce a person’s chances of finding decent work, and have a major impact on how the benefits of economic growth are shared within societies. In countries where adults tend to have poor skills, it is difficult to introduce productivityenhancing technologies and new ways of working, which affects living standards, according to a new OECD report, Skills Matter: Further Results from the Survey of Adult Skills.

See www.oecd.org/skills/

Income inequality is worsening within many countries, and regional disparities in housing, safety and air quality inside countries are also growing wider. Although regional gaps are narrowing in education and Internet access, disparities in GDP per head, disposable income, safety and air pollution are widening in many, according to OECD Regions at a Glance 2016.  

See www.oecd.org/regional/  


Plus ça change...

E-commerce is a marvellous thing. And while it may be suffering from hype today, I see it as a harbinger of the reality of tomorrow.

“E-commerce: From hype to reality”, by Donald J Johnston, former Secretary-General of the OECD, in Issue No 224, January 2001  

©OECD Observer No 307 Q3 2016




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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