Rising private consumption and investment growth have pulled the economy out of recession. However, output growth is projected to remain sluggish over the coming years, as domestic demand growth is projected to weaken again, although export growth will rise significantly as external demand edges up and competitiveness improves. Unemployment will decline modestly and inflation will pick up only slowly. 

Economic growth is projected to remain subdued. Despite supportive monetary conditions, investment weakness will persist, reflecting low demand, banking sector fragilities and uncertainties about European integration. High unemployment and modest wage growth will hold back private consumption, while exports will be hampered by soft global trade and by weaker growth in the UK following the Brexit referendum. Inflation is set to rise very gradually. Across euro area countries, major differences in growth and unemployment prospects will persist.

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 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. 

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.

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. 

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. 

©OECD

Chairman Emeritus of Young & Rubicam Peter Georgescu visited the OECD on 3 May 2016. The author gave a talk on inequality. Part of The Coffees of the Secretary-General series, you can read the complete transcript of Mr Georgescu’s presentation below.  

While policy making and OECD membership helps explain much of Korea’s successes in the last two decades, major firms have had a role to play too. In fact, Korea is associated with several global household brands, as strong demand for the likes of Samsung curved televisions, Hyundai hybrid cars and K-pop hits like “Gangnam Style” jolting the Land of the Morning Calm into the sixth-largest exporter in the world. But while productivity in many large manufacturers has pushed Korea into the world’s top ten producers of cars, ships, mobile phones and DVDs, productivity in smaller firms and the service industry means overall productivity is half the level of leading OECD countries. 

©Michael Dean/OECD Observer

Korea’s transition from one of the poorest countries on earth in the early 1960s to the world’s 11th-largest economy and sixth-largest exporter by 2015 is unprecedented. 

© Reuters/Thomas Mukoya

Innovative business models are creating new dynamics between formal companies and informal micro-entrepreneurs.

The world’s oceans, seas and rivers are a major source of wealth, creating trillions of dollars’ worth in goods and services as well as employing billions of people. […] Yet Africa’s blue potential remains untapped.

Screenshot of OECD Chief Economist Catherine L Mann on Bloomberg TV, 9 November Bloomberg TV

The global economy is projected to grow at a slower pace this year than in 2015, with only a modest uptick expected in 2017, the OECD’s latest interim Economic Outlook warns. The Outlook warns that a low-growth trap has taken root, as poor growth expectations further depress trade, investment, productivity and wages.

Click to enlarge

Real GDP growth slowed in most of the emerging economies in Asia in 2014 and remained subdued in 2015, the Economic Outlook for Southeast Asia, China and India 2016 says. In fact, most countries in the region recorded slower growth in 2015 than in 2014–the exceptions being Brunei Darussalam, Thailand, Viet Nam and India. China and the ASEAN region recorded their slowest growth since the start of the global financial crisis. 

Top earners are more likely to be salaried executives or company founders, like Facebook’s Mark Zuckerberg ©Justin Sullivan/Getty Images/AFP

Across much of the OECD, the share of national income taken by the top 1% of earners has risen, sometimes sharply, in recent decades. 

The Internet is now an essential part of our lives and a critical element of the world economy. Internet penetration increased almost sevenfold in the past 15 years, from 6.5% of the world population in 2000 to 43% in 2015.

A clash between robots and workers is unlikely. Rather, disruptive technology can make workers more efficient without replacing them, and raise profits, while maintaining or increasing a company’s workforce.

Pepper the humanoid robot, at OECD Forum 2016 ©Rory Clarke/OECD Observer

To many workers, the words “digital technologies” may evoke one simple, dismaying image: a human-like robot sitting at their desk, doing the work that they used to do! This anxiety is not different from the fear of coachmen witnessing the diffusion of cars in the 1920s. In a sense, coachmen were right: cars did replace horse coaches. However, their children and grand-children found new and often better paid jobs in the wealth of new activities made necessary or possible by cars: automobile manufacturing, car repair, travelling sales, home delivery, mass tourism, road building, the petrol business, and so on.

©Rights reserved

Digital innovation is an opportunity—for governments, for business, for the public, and for the way in which they relate to each other.

©OECD

The digital economy is here, and growing every day, sometimes in surprising ways. As ministers gather for major meetings in Paris and Cancun, government leaders should be in no doubt about the key role they must play in securing the digital economy’s future as a driver of productive and inclusive progress.

Advanced economies remain in the doldrums. People’s incomes are rising at a very low pace, especially in the lower half of the distribution. Two global trends–the slowdown in productivity and the rise in inequality–reflect the state of policy, and point to the challenges policymakers face to change prospects for their citizens and the global economy.

This year’s OECD Ministerial Council Meeting (MCM), chaired by Chile, is devoted to productivity. Ministers will discuss what governments, firms and individuals can do to improve productivity with the aim of fostering inclusive growth. Their views will no doubt be nourished by public discussions at the annual OECD Forum, which precedes the MCM. The purpose of enhancing productivity should be to make economies grow faster and in a smarter way, while simultaneously decreasing inequalities and allowing everyone to be part of the productive system. The final goal is to improve the well-being of our citizens, providing people with better tools to meet their job requirements and to reach their full potential. This is a main challenge of our time, when the key drivers of growth and well-being will come from capital-based knowledge.

Creeping protectionism is alive and well. Last year’s monitoring report on trade for the G20 reminded us that of the nearly 1,500 trade-restrictive measures imposed by G20 countries since 2008, fewer than 400 have been removed. The stock of these barriers continues to grow, despite a pledge by the G20 to reduce protectionism. Not surprisingly, given this context, a recent World Trade Organisation (WTO) report concludes that the risks to the international trading system and to trade flows more generally “are tilted to the downside.”

If there is a silver lining to the 2008 financial crisis, it is that it was a catalyst for the unprecedented progress we have made in building robust international tax standards for the interconnected global economy of the 21st century.

The world has seen more than one industrial revolution and another one is already upon us. We should face it as optimists.

Charlotte Moreau

Algorithms lie at the heart of machine learning, which, in turn lies at the heart of much of modern life–from online shopping to intelligence gathering. But most of us know little about these powerful tools and how they work. Is this wise?

Santiago de Chile alobos Life, on Flickr

For Chile, it is a great honour and opportunity to chair the 2016 OECD Ministerial Council Meeting. It is an opportunity to cele­brate Chile’s first five years as a member of the OECD and is yet another demonstration of the increasing relevance of emerg­ing and developing economies, which today account for more than half of world GDP. It is also a way to influence the OECD agenda from the perspective of a group of prosperous, but still unequal, countries.

©Adrian Dennis/AFP

If a British referendum on European Union membership scheduled for 23 June led the UK to leave the EU, there would be a severe negative shock to the economy, causing growth to weaken for many years,  an OECD study argues.

©AFP

When it comes to global wealth inequality, we know how bad it’s getting, but what do we know about who is responsible? When Oxfam reports that 1% of the world population owns more than the other 99% put together, the question arises: who or what is making the rich so much richer, and the poor so much poorer?

The UK’s tallest mountain is Ben Nevis in Scotland. Recently, it became one metre taller, standing now at 1 345m rather than 1 344m above sea level. Of course, the mountain did not actually grow. Rather, the team of Ordnance Survey experts who re-measured it for the first time since 1949 were able to do so more accurately because of improvements in technology, and specifically through the use of GPS.

Economic data

GDP growth: +0.6% Q1 2019 year-on-year
Consumer price inflation: 2.3% May 2019 annual
Trade: +0.4% exp, -1.2% imp, Q1 2019
Unemployment: 5.2% July 2019
Last update: 8 July 2019

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  • The following communiqué and Chair’s statement were issued at the close of the OECD Council Meeting at Ministerial level, this year presided by the Slovak Republic.
  • Food production will suffer some of the most immediate and brutal effects of climate change, with some regions of the world suffering far more than others. Only through unhindered global trade can we ensure that high-quality, nutritious food reaches those who need it most, Angel Gurría, Secretary-General of the OECD, and José Graziano da Silva, Director-General of the United Nations Food and Agriculture Organization, write in their latest Project Syndicate article. Read the article here.
  • Globalisation will continue and get stronger, and how to harness it is the great challenge, says OECD Secretary-General Gurría on Bloomberg TV. Watch the interview here.
  • OECD Secretary-General Angel Gurría with UN Secretary-General António Guterres at the 73rd Session of the UN General Assembly, in New York City.
  • The new OECD Observer Crossword, with Myles Mellor. Try it online!
  • Listen to the "Robots are coming for our jobs" episode of The Guardian's "Chips with Everything podcast", in which The Guardian’s economics editor, Larry Elliott, and Jeremy Wyatt, a professor of robotics and artificial intelligence at the University of Birmingham, and Jordan Erica Webber, freelance journalist, discuss the findings of the new OECD report "Automation, skills use and training". Listen here.
  • Do we really know the difference between right and wrong? Alison Taylor of BSR and Susan Hawley of Corruption Watch tell us why it matters to play by the rules. Watch the recording of our Facebook live interview here.
  • Has public decision-making been hijacked by a privileged few? Watch the recording of our Facebook live interview with Stav Shaffir, MK (Zionist Union) Chair of the Knesset Committee on Transparency here.
  • Can a nudge help us make more ethical decisions? Watch the recording of our Facebook live interview with Saugatto Datta, managing director at ideas42 here.
  • The fight against tax evasion is gaining further momentum as Barbados, Côte d’Ivoire, Jamaica, Malaysia, Panama and Tunisia signed the BEPS Multilateral Convention on 24 January, bringing the total number of signatories to 78. The Convention strengthens existing tax treaties and reduces opportunities for tax avoidance by multinational enterprises.
  • Globalisation’s many benefits have been unequally shared, and public policy has struggled to keep up with a rapidly-shifting world. The OECD is working alongside governments and international organisations to help improve and harness the gains while tackling the root causes of inequality, and ensuring a level playing field globally. Please watch.
  • Checking out the job situation with the OECD scoreboard of labour market performances: do you want to know how your country compares with neighbours and competitors on income levels or employment?
  • Trade is an important point of focus in today’s international economy. This video presents facts and statistics from OECD’s most recent publications on this topic.
  • The OECD Gender Initiative examines existing barriers to gender equality in education, employment, and entrepreneurship. The gender portal monitors the progress made by governments to promote gender equality in both OECD and non-OECD countries and provides good practices based on analytical tools and reliable data.
  • Interested in a career in Paris at the OECD? The OECD is a major international organisation, with a mission to build better policies for better lives. With our hub based in one of the world's global cities and offices across continents, find out more at www.oecd.org/careers .
  • Visit the OECD Gender Data Portal. Selected indicators shedding light on gender inequalities in education, employment and entrepreneurship.

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