Press Conference. Angel Gurría Secretary-General and Álvaro Pereira Director, Country Studies, Economics Department

Transcription

1 Economic Outlook No November 2015 Press Conference Angel Gurría Secretary-General and Álvaro Pereira Director, Country Studies, Economics Department For a video link to the press conference and related material:

2 OECD Economic Outlook - November 2015 Summary of OECD projections for G20 countries Real GDP growth 1 (%) World United States Euro area Germany France Italy Spain Japan United Kingdom Mexico Korea Canada Turkey Australia China India Russia Brazil Indonesia South Africa OECD Non-OECD World real trade growth Year-on-year increase. 2. Moving nominal GDP weights using purchasing power parities. 3. Fiscal years starting in April. 2

3 Key Issues Global trade weakness Harbinger of further slowing of global GDP growth? China s role at centre via commodity prices and global value chains Advanced economies resilient so far Investment disconnect Real investment continues to disappoint Financial exposures in emerging markets could create stress Policy reconfiguration to support demand Resume momentum for structural reforms, especially financial sector and network services in Europe Take advantage of low interest rates to increase public infrastructure investment, including to tackle climate change 3

4 Global GDP growth: modest projected upturn (given smooth slowdown in China and more robust investment in advanced economies) Global GDP Real GDP Annual percentage changes World United States Euro area Japan China India Brazil Moving nominal GDP weights using purchasing power parities. 2. Fiscal years starting in April. Source: OECD November 2015 Economic Outlook database. Dramatic slowdown in global trade growth Such slow rates historically occur with recessions Import Volumes Import Volumes Source: OECD November 2015 Economic Outlook database. 4

5 Weaker import growth in China is a key element of the broader trade slowdown Chinese import growth has slowed sharply This has exerted downward pressure on commodity prices Note: 2015 is change in the first three quarters vs Import volumes are deflated based on OECD estimates. Nominal imports during the first three quarters of 2015 were down 8 per cent. Sources: OECD November 2015 Economic Outlook database. Note: Commodities shown are aluminium, coal, copper, iron ore, lead, natural gas, nickel, oil, uranium and zinc. Sources: IMF; BP Statistical Review of World Energy; World Bureau of Metal Statistics. Rebalancing is happening in China but its pace is uncertain Manufacturing and services growth Services have been growing faster than manufacturing associated with more consumption GDP forecasts for China and number of forecasters But forecasters are unsure about the true underlying pace of GDP growth Sources: Chinese National Bureau of Statistics, Bloomberg. 5

6 Weaker Chinese import growth helps explain slowdowns among other EMEs Change in GDP growth Y-o-y growth in Q compared to y-o-y growth in Q Sharpest slowdowns in countries with close trade links to China and/or dependent on commodities Note: For Korea, 2015 Q3 compared to 2014 Q3. Intensive trade with China is where merchandise exports to China were above 2% of GDP in Sources: OECD National Accounts database; IMF; UNCTAD. As a group, advanced economies have so far been resilient to EME weakness Revisions to the OECD Economic Outlook projections between June and November 2015 GDP projections for OECD economies changed little compared to BRICS Although OECD export growth has been revised down sharply Sources: OECD June and November 2015 Economic Outlook databases. 6

7 Real investment exhibits sluggishness and mixed projected improvement Real fixed investment Projected improvement assumes favourable structural and demand policy settings 1. OECD commodity exporters include Australia, Canada, Chile, Mexico and Norway. Source: OECD November 2015 Economic Outlook database. Financial exposures have increased; market volatility could exacerbate vulnerabilities Increase in debt levels in EMEs end-period, per cent of GDP EMEs sovereign bond spreads and US equity price volatility Note: Credit from banks and non-banks adjusted for breaks. For South Africa 2008 instead of Source: BIS. Source: Thomson Reuters 7

8 Tighter labour markets and new policies should yield healthier wage growth, but haven t yet Unemployment rate Compensation per employee Source: OECD November 2015 Economic Outlook database. Structural policy ambition is key for the outlook, but progress has stalled Changes in the strictness of regulatory barriers to competition Average OECD indicator of product market regulation, overall index and three main sub-components Source: OECD calculations. 8

9 Monetary policy support is required to reach inflation targets Core inflation Core inflation is not projected to reach central bank target levels within 2 years in any major advanced economy Note: Consumer prices excluding food and energy. The private consumption deflator is used for the United States. For Japan, excludes the estimated impact of the consumption tax increases in April 2014 and April Source: OECD November 2015 Economic Outlook database. Accompanying structural reforms needed so as to improve credit channel (euro area) and to promote reallocation (Japan) Collective action on public investment could support growth without worsening debt ratios 1 st year effects of ½ percent of GDP public investment stimulus by all OECD economies Change from baseline Note: Simulation using the NiGEM model, based on a two-year increase in the level of government investment equivalent to ½ per cent of GDP per annum in all OECD countries. The euro area figures are a weighted average of Germany, France and Italy. Source: OECD calculations. Collective action, quality projects, and structural policy efforts are required to realise these gains 9

10 Tackling climate change is a long-term challenge but must be more ambitious now Source: IPCC. Collective action is needed, but advanced economies have lost momentum Global new investment in renewable energy Note: New investment volume adjusts for re-invested equity. Total values include estimates for undisclosed deals. Developed volumes are based on OECD countries excluding Mexico, Chile and Turkey. Sources: Bloomberg New Energy Finance; UNEP; Frankfurt School for Climate & Sustainable Energy Finance. 10

11 Well-designed climate change policies can improve the short-term outlook Cost-benefit analysis should not deter action Some costs now but smaller than costs of inaction With clear and credible policies Some costs can stimulate activity, such as through investment, research, confidence effects Even a weak growth outlook Is not an excuse to delay policy action on climate change Collective action on investment, including on climate, would support growth Summary Despite recent weakness, global trade and GDP are expected to recover in The projections assume effective policies and collective action reflected in revived investment and wage growth Structural reform efforts need to be revived to support monetary and fiscal efforts Infrastructure spending, including for climate change mitigation could help in the short as well as the long-term 11