OECD Economic Outlook, Volume 2016 Issue 2 (eBook)

Oecd (Autor)

eBook Download: EPUB

2016 | 1. Auflage
336 Seiten
OECD Publishing (Verlag)
978-92-64-26760-2 (ISBN)

Infos

The OECD Economic Outlook  is the OECD's twice-yearly analysis of the major economic trends and prospects for the next two years. The Outlook puts forward a consistent set of projections for output, employment, prices, fiscal and current account balances.

Coverage is provided for all OECD member countries as well as for selected non-member countries. This issue includes a general assessment, a special chapter on promoting productivity and equality, a chapter summarising developments and providing projections for each individual country and a statistical annex.

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Chapter 1. General assessment of the macroeconomic situation

Introduction

For the last five years the global economy has been in a low-growth trap, with growth disappointingly low and stuck at around 3%. Persistent growth shortfalls have weighed on future output expectations and thereby reduced current spending and potential output growth. Global trade and investment have been weak, limiting the advances in labour productivity and wages that are required to support sustainable consumption growth. However, fiscal policies, both implemented and proposed, could, if effective, catalyse private economic activity and push the global economy to a modestly higher growth rate of around 3½ per cent by 2018. Exiting the low-growth trap depends on policy choices, as well as on concerted and effective implementation. If, as assumed in the projections, the incoming US Administration implements a significant and effective fiscal initiative that boosts domestic investment and consumption, global growth could increase by 0.1 percentage point in 2017 and 0.3 percentage point in 2018. If the fiscal stimulus underway in China continues to support demand, this could also bolster global growth by 0.2 percentage points per annum on average over 2017-18. A more robust fiscal easing than currently projected in many other advanced economies, including in the EU, would further support domestic and global activity. OECD analysis of fiscal space indicates that the EU has room for more concerted action.

Against this backdrop of fiscal initiatives, progress on trade policy would help propel the global economy out of the low-growth trap as well as support a revival of productivity. On the other hand, worsening protectionism and the threat of trade retaliation could offset much of the fiscal initiatives’ impact on domestic and global growth, leaving countries with a poorer fiscal position as well. With pressures in labour and product markets building only slowly, inflation should remain modest in most economies, although resource pressures could start to emerge in the United States. If expectations of medium and longer-term growth revive, thus allowing monetary policy to move toward a more neutral stance in the United States, it might help to ameliorate some existing distortions in financial markets, such as a lack of term and credit risk premia. However, the risk of a growing divergence in the monetary policy stance in the major economies over the next two years could be a new source of financial market tensions. New challenges have also arisen from the UK vote to leave the European Union, raising the prospect of an extended period of uncertainty until the future scope of trade relationships with the rest of the European Union becomes clear.

In order to ensure the exit from the low-growth equilibrium, there is a need for effective and collective policy efforts to support aggregate demand in the short term and raise potential growth in the longer term. Towards these ends, accommodative monetary policy needs to be complemented by enhanced collective use of fiscal and more ambitious structural policies and avoidance of more widespread trade protectionism. Financial market distortions and prospects for greater volatility imply that there is no scope to expand monetary easing beyond existing plans in the main advanced economies. On the other hand, countries should closely examine fiscal space with lower interest rates enabling countries to boost hard and soft infrastructure and other growth-enhancing spending for an average of four years while leaving debt-to-GDP ratios unchanged (see Chapter 2). Collective action in this area, including reallocating public spending towards more growth-friendly items, would catalyse business investment and deliver additional output gains from cross-country spillovers. Fiscal choices depend on structural policies, otherwise they will fail to strengthen productivity growth and labour utilisation and will undermine debt sustainability. Given the dramatic slowdown in trade, reversing protectionist measures since the crisis and further expanding the scope for international trade, coupled with measures to better share the gains from trade, are key collective structural policy priorities. A bold and comprehensive use of monetary, fiscal and structural measures should raise growth expectations and reduce risk perceptions, and thereby put the global economy on a sustainable higher-growth path.

The recovery could gain steam depending on policy choices

Prospects for sub-par global growth persist despite the low-interest rate environment (Figure 1.1), reflecting poor underlying supply-side developments, modest aggregate demand and diminished reform efforts. Despite an upturn in the third quarter of 2016, global GDP growth is estimated to have again been around 3% this year, over ¾ percentage point weaker than the average in the two decades prior to the crisis. In the absence of action to remedy this persistent shortfall, it will be increasingly difficult for governments to meet all of their implicit future commitments to society, or even meet current expectations for their citizens. While there are signs that output growth has now started to edge up in the emerging and developing economies after a prolonged slowdown, helped by the near-term effects of policy support in China and easing recessions in many commodity producers, the advanced economies have yet to collectively gain much additional momentum.

Figure 1.1. Global GDP growth is set to rise

Year-on-year percentage changes

Note: GDP measured using purchasing power parities.

1. With growth in Ireland in 2015 computed using gross value added at constant prices excluding foreign-owned multinational enterprise dominated sectors.

Source: OECD Economic Outlook 100 database.

StatLink  http://dx.doi.org/10.1787/888933437145

News-based measures of policy uncertainty remain elevated in a number of countries, and at the global level (Figure 1.2). This adds to downside risks, with likely negative effects on activity if it persists. Despite this, equity market turbulence has eased after sharp initial reactions to the results of the US election and UK referendum, although bond market volatility has risen. Government bond yields have turned up from historic lows in many economies, helped by higher market expectations of future inflation and hence the future pace of policy interest rate rises in the United States.

Figure 1.2. Economic policy uncertainty remains elevated in a number of economies

Policy uncertainty index normalised over 2011-2015, 3-month moving average

Note: The emerging market economies measure is a PPP weighted average of news-based policy uncertainty in China, India, Brazil and Russia. The estimates for the United States and the United Kingdom in November are based on daily data available up to November 21.

Source: PolicyUncertainty.com; and OECD calculations.

StatLink  http://dx.doi.org/10.1787/888933437152

Global growth could gain some steam through the next two years, albeit only to around 3½ per cent by 2018 and under the assumption of a more supportive fiscal stance in the United States, with associated demand spillovers to other economies (Table 1.1). If these changes in the United States and the estimated impact of projected fiscal easing in China and the euro area fail to materialise, global GDP growth would be around 0.4 percentage point weaker than projected in 2017 and 0.6 percentage point weaker in 2018 (Box 1.1 and Figure 1.3). Even weaker outcomes would result if restrictive trade measures were to be put in place, but the implementation of trade facilitation measures would boost growth (Box 1.3).

Table 1.1. The global recovery could gain some steam

StatLink  http://dx.doi.org/10.1787/888933438659

Figure 1.3. Fiscal stimulus is helping to support GDP growth

Estimated contribution to annual GDP growth

Note: Based on macro-model simulations of an assumed fiscal stimulus in the United States worth ¾ per cent of GDP in 2017 and 1¾ per cent of GDP in 2018; actual and projected fiscal stimulus in China of 1½ per cent of GDP in 2016 and 1% of GDP in both 2017 and 2018; and actual and projected fiscal stimulus in the euro area of 0.4% of GDP in 2016, 0.2% of GDP in 2017 and 0.3% of GDP in 2018. The stimulus in China and the euro area is assumed to be implemented through government final expenditure on consumption. Details of the stimulus in the United States are set out in Box 1.1.

Source: OECD Economic Outlook 100 database; and OECD calculations.

StatLink  http://dx.doi.org/10.1787/888933437163

Box 1.1. The short-term impact of fiscal stimulus in the United States

In the aftermath of the US elections, there is widespread expectation of a significant change in direction for macroeconomic policy. The extent to which the fiscal programme set out by the new Administration during the election campaign is implemented will not become clear for some time, as agreement by Congress will be required to introduce...

Produkt-Details

• Erscheint lt. Verlag: 17.12.2016
• Sprache: englisch
• Themenwelt: Sozialwissenschaften ► Politik / Verwaltung ► Staat / Verwaltung
• Themenwelt: Wirtschaft ► Volkswirtschaftslehre ► Wirtschaftspolitik
• ISBN-10: 92-64-26760-3 / 9264267603
• ISBN-13: 978-92-64-26760-2 / 9789264267602