1 What is the economic outlook for OECD countries? Paris, 28 November 2011 11h Paris time Pier Carlo Padoan Deputy Secretary-Gener al and Chief Economist
8/3/2019 OECD Economic Outlook
http://slidepdf.com/reader/full/oecd-economic-outlook 1/18
1
What is the economic outlook for
OECD countries?
Paris, 28 November 2011
11h Paris time
Pier Carlo PadoanDeputy Secretary-General and Chief Economist
8/3/2019 OECD Economic Outlook
http://slidepdf.com/reader/full/oecd-economic-outlook 2/18
2
The outlook
T
h e o u t l o o k
2010 2011 2012 2013
United States 3.0 1.7 2.0 2.5
Euro area 1.8 1.6 0.2 1.4
Japan 4.1 -0.3 2.0 1.6
Total OECD 3.1 1.9 1.6 2.3
Source:OECD Economic Outlook 90 database.
Brazil 7.5 3.4 3.2 3.9
China 10.4 9.3 8.5 9.5
India 9.9 7.7 7.2 8.2
Indonesia 6.1 6.3 6.1 6.5
Russian Federation 4.0 4.0 4.1 4.1
South Africa 2.8 3.2 3.6 4.7
Real GDP growth, in per cent
8/3/2019 OECD Economic Outlook
http://slidepdf.com/reader/full/oecd-economic-outlook 3/18
3
Confidence is weakening
C
o n f i d e n c e
Business confidence Consumer confidence
25
30
35
40
45
50
55
60
65
25
30
35
40
45
50
55
60
65
2008 2009 2010 2011
United States
Japan
Euro area
Note: Manufacturing sector. Values greater than 50
signify an improvement in economic activity.
Source: Markit Economics Limited.
-3
-2.5
-2
-1.5
-1
-0.5
0
0.5
1
-3
-2.5
-2
-1.5
-1
-0.5
0
0.5
1
2008 2009 2010 2011
United States
Japan
Euro area
Note: Values below zero signify levels of consumer
confidence below the period average.
Source: OECD Main Economic Indicators.
8/3/2019 OECD Economic Outlook
http://slidepdf.com/reader/full/oecd-economic-outlook 4/18
4
Equity markets extremely volatile
E q u i t y p r i c e s
Share price indices, January 2010 = 100
Note: Wilshire 5000, FTSE Eurotop 100, FTSE 100, Nikkei 225, Shanghai Composite. Last observation: 23-11-2011.
Source: Datastream
70
80
90
100
110
120
130
70
80
90
100
110
120
130
Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11
United States Euro area
United Kingdom Japan
China
8/3/2019 OECD Economic Outlook
http://slidepdf.com/reader/full/oecd-economic-outlook 5/18
5
Financial conditions tightening
F i n a n
c i a l c o n d i t i o n s
OECD Financial Conditions Index
Note: A unit increase (decline) in the index implies an easing (tightening) in financial conditions sufficient to
produce an average increase (reduction) in the level of GDP of ½ to 1% after four to six quarters.
Source:Datastream; OECD Economic Outlook 90 database; and OECD calculations.
-6
-4
-2
0
2
4
6
-6
-4
-2
0
2
4
6
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
United States
Euro area
Japan
8/3/2019 OECD Economic Outlook
http://slidepdf.com/reader/full/oecd-economic-outlook 6/18
6
Euro-area sovereign spreads widening
S o v e r e i g n s p r e a
d s
10-year government bond yield spreads ver sus Ger man bunds, percentage points
Note: Last observation: 24-11-2011.
Source: Datastream.
0
5
10
15
20
25
30
35
0
5
10
15
20
25
30
35
J a n - 1
0
M a r -
M a y
J u l - 1 0
S e p -
N o v -
J a n - 1 1
M a r -
M a y
J u l - 1 1
S e p -
N o v -
Italy
Greece
Ireland
Portugal
Spain
0
1
2
3
4
5
6
7
0
1
2
3
4
5
6
7
J a n - 1
0
M a r - 1 0
M a y - 1
0
J u l - 1 0
S e p - 1
0
N o v - 1
0
J a n - 1 1
M a r - 1 1
M a y - 1 1
J u l - 1 1
S e p - 1 1
N o v - 1 1
France
Austria
Belgium
Netherlands
8/3/2019 OECD Economic Outlook
http://slidepdf.com/reader/full/oecd-economic-outlook 7/18
7
Divergent euro area labour costs
E u r o a
r e a r e b a l a n
c i n g
Unit labour costs, 2000 = 1
Source: OECD Economic Outlook 90 Database.
0.9
1
1.1
1.2
1.3
1.4
1.5
1.6
0.9
1
1.1
1.2
1.3
1.4
1.5
1.6
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Germany
France
Ireland
Portugal
Spain
Greece
Italy
8/3/2019 OECD Economic Outlook
http://slidepdf.com/reader/full/oecd-economic-outlook 8/18
8
World trade has stagnated
W
o r l d t r a d e
CPB world trade index
Note: Index 2000 = 100.
Source: CPB.
80
90
100
110
120
130
140
150
160
170
80
90
100
110
120
130
140
150
160
170
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
8/3/2019 OECD Economic Outlook
http://slidepdf.com/reader/full/oecd-economic-outlook 9/18
8/3/2019 OECD Economic Outlook
http://slidepdf.com/reader/full/oecd-economic-outlook 10/18
10
-8
-6
-4
-2
0
2
4
6
8
2007 2008 2009 2010 2011 2012 2013
Growth to be sustained by non-OECD
W
o r l d g r o w t h
Contribution to annualised quarterly world real GDP growth, percentage points
Note: Calculated using moving nominal GDP weights, based on national GDP at purchasing power parities.
Source: O
ECD EconomicO
utlook 90 database.
OECD
Non-OECD
8/3/2019 OECD Economic Outlook
http://slidepdf.com/reader/full/oecd-economic-outlook 11/18
11
Unemployment will remain high
U n
e m p l o y m e n
t
Unemployment rates, percentage of labour force
Source: OECD Economic Outlook 90 database.
0
2
4
6
8
10
12
0
2
4
6
8
10
12
2006 2007 2008 2009 2010 2011 2012 2013
United States
Euro area
Japan
8/3/2019 OECD Economic Outlook
http://slidepdf.com/reader/full/oecd-economic-outlook 12/18
12
Policy rates becoming accommodative
M o
n e t a r y p o l i c y
Policy interest rates, in percent
0
2
4
6
8
10
12
14
16
0
2
4
6
8
10
12
14
16
J a n - 0
8
M a r - 0 8
M a y - 0
8
J u l - 0 8
S e p - 0
8
N o v - 0
8
J a n - 0
9
M a r - 0 9
M a y - 0
9
J u l - 0 9
S e p - 0
9
N o v - 0
9
J a n - 1
0
M a r - 1 0
M a y - 1
0
J u l - 1 0
S e p - 1
0
N o v - 1
0
J a n - 1 1
M a r - 1 1
M a y - 1 1
J u l - 1 1
S e p - 1 1
N o v - 1 1
United States Euro area
Japan Brazil
China India
Source: Datastream; Central Bank of Brazil; Reserve Bank of India; and CEIC.
8/3/2019 OECD Economic Outlook
http://slidepdf.com/reader/full/oecd-economic-outlook 13/18
13
Fiscal consolidation is ongoing
F
i s c a l p o l i c y
Change in underlying primary balance 2011 to 2013, percent of GDP
-1
0
1
2
3
4
5
6
-1
0
1
2
3
4
5
6
PRT GRC ITA HUN IRL POL ESP FRA GBR BEL USA NLD AUT DEU EST DNK JPN CHE
Note: Percentage of potential GDP. Total consolidation is the projected difference in the underlying primary balance;
revenue side is the projected increase in the underlying receipts excluding interest earned on financial assets; and
spending side is the projected decline in the underlying primary spending excluding interest payments on debt.
Source: OECD Economic Outlook 90 database; and OECD calculations.
Spending side
Revenue side
8/3/2019 OECD Economic Outlook
http://slidepdf.com/reader/full/oecd-economic-outlook 14/18
14
The downside scenario
D o w
n s i d e s c e n a
r i o
Intensification of euro-area crisis and excessive US fiscal consolidation
Source: OECD calculations.
-4
-2
0
2
4
6
8
10
-4
-2
0
2
4
6
8
10
2012 2013 2012 2013 2012 2013 2012 2013
United States Euro area Japan China
Baseline
Downside
scenario
8/3/2019 OECD Economic Outlook
http://slidepdf.com/reader/full/oecd-economic-outlook 15/18
15
The upside scenario
U p
s i d e s c e n a r i o
Euro-area debt crisis successf ully def used
Source: OECD calculations.
0
2
4
6
8
10
12
0
2
4
6
8
10
12
2012 2013 2012 2013 2012 2013 2012 2013
United States Euro area Japan China
Baseline
Upside
scenario
8/3/2019 OECD Economic Outlook
http://slidepdf.com/reader/full/oecd-economic-outlook 16/18
16
Prerequisites for achieving the upside
U p s i d
e p r e r e q u i s
i t e s
The euro area:
The 26 October package:
Stabilisation by ensuring an adequately resourced European
Financial Stability Fund (EFSF).
Voluntary Greek sovereign debt haircut.
Shoring up the banking sector through recapitalisation.
Be ready to provide liquidity to the banking sector if needed.
Overhaul of euro-area governance, combined with
substantive str uctural refor ms.
These measures need to be followed up at the next ECOFINCouncil on 9 December.
The United States:
Efforts need to be redoubled to reach an agreement on a credible
fiscal progra
mme.
Stop contagion
8/3/2019 OECD Economic Outlook
http://slidepdf.com/reader/full/oecd-economic-outlook 17/18
17
The OECD Strategic Response
S t r a
t e g i c r e s p o n
s e
Identifies country-specific policy measures that could beimplemented in the event of a relapse:
Fiscal support backed by improved fiscal frameworks where
public finances and confidence allows.
Monetary policy easing where possible.
Str uctural refor ms to strengthen growth, lower unemployment
and bolster confidence.
8/3/2019 OECD Economic Outlook
http://slidepdf.com/reader/full/oecd-economic-outlook 18/18
18
What is the economic outlook for
OECD countries?
Paris, 28 November 2011
11h Paris time
Pier Carlo PadoanDeputy Secretary-General and Chief Economist