OECD Economic Outlook - November 2015

Real GDP growth (%)Summary of OECD projections for G20 c

Year	World	India	China	Usa	Euro area
2014	2.3	7.3	7.3	2.4	0.9
2015	2.9	7,2	6.8	2.4	1.5
2016	3.3	7.3	6.5	2.5	1.8
2017	3.6	7.4	6.2	2.4	1.9

 OECD Views

• Harbinger of further slowing of global GDP growth
•  China’s role at centre via commodity prices and global value chains
•  Real investment continues to disappoint
• Financial exposures in emerging markets could create stress
• 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  

This blog recommends no investment 

Oil headed south all the way to 2016

10 July 2015 IEA (International Energy Agency) OIL MARKET REPORT 

Global oil demand growth is forecast to slow to 1.2 million barrels per day (mb/d) in 2016, from an average 1.4 mb/d this year,

World oil demand growth may  have peaked in the first quarter at 1.8 mb/dn

Global oil supply surged by 550 000 barrels per day (550 kb/d) in June, on higher output from both OPEC and non-OPEC producers.

At 96.6 mb/d, world oil production was  3.1 mb/d higher than a year earlier, with OPEC crude and natural gas liquids accounting for 60% of the gain. n

OPEC crude supply rose by 340 kb/d in June to 31.7 mb/d, a three- year high, led by record high output from Iraq, Saudi Arabia and the United Arab Emirates. OPEC output stood 1.5 mb/d above the previous year.  

OECD industry inventories hit a record 2 876 mb in May, up by a steep 38 mb. Product holdings led the build-up and by end-month covered 30.7 days of forward demand. Global supply and demand balances suggest that the rate of global stock increases quickened rapidly to an astonishing 3.3 mb/d during the second quarter.

 Without risk or responsibility 

Some price rise!!!: OECD annual inflation up to 0.6% in May 2015

Annual inflation in the OECD area picked up to 0.6% in the year to May 2015, compared with 0.4% in April. This increase in the annual rate of inflation mainly reflected the slower decline in energy prices at -10.0% in May, as compared with -11.5% in the year to April.

Food price inflation slowed to 1.6% in May, compared with 1.8% in April. Excluding food and energy, the OECD annual inflation rate was stable at 1.6%.

Source: Consumer price indices, OECD

OECD cuts growth rate

OECD revises growth downwards

Source: OECD

OECD sees global growth at 3.1% in 2015, rising to 3.8% in 2016. This is less than the 3.6% and 3.9% foreseen in the previous Outlook in November 2014, largely on account of the unexpected weakness seen in the first quarter of 2015. 

US GDP growth is projected to be 2.0% in 2015 and 2.8% in 2016, a downward revision from the November 2014 forecast of 3.1% this year and 3.0% in 2016. While the stronger dollar and adverse weather weighed on growth in early 2015, unemployment continues to fall. Supportive monetary policy and lower oil prices should continue boosting demand.

Output in the Euro area is expected to rise by 1.4% this year and 2.1% in 2016, more than forecasted in the previous Outlook, when the projections were 1.1% for 2015 and 1.7% for 2016.  

Japanese growth is projected at 0.7% in 2015 (compared with 0.8% in the previous Outlook) and 1.4% in 2016 (1.0% previously). Lower oil prices, stronger exports reflecting the weaker yen and real wage gains are among the factors driving the recovery.

In China, the 2015 GDP growth forecast has been revised down to 6.8%, from 7.1% in the November Outlook, and to 6.7% from 6.9% for 2016. The deceleration reflects the restructuring underway in the Chinese economy as services replace manufacturing and real estate investment as the main driver of growth.

Growth in India is expected to remain strong and stable in 2015 (at 7.3%) and 2016 (7.4%). 

Source: OECD  

Without any risk or responsibility 

OECD Prescriptions for China

In its survey of China  OECD has stated that China's growth has moved from a trajectory of extraordinary development to a slower, sustainable growth.

OECD suggests the following: 

Reforms for sustainable growth. 

·         a level playing field with regard to finance, regulation, taxation and public procurement.

·         liberalize deposit interest rates while enhancing financial stability

·         increase fiscal transparency and sustainability.

Urbanisation and services as drivers of growth. 

·         should extend public service provision and social security coverage to all migrant workers and make social security benefits portable across the country.

·         scale down state-ownership in commercially-oriented service enterprises b

Nurturing the right skills. 

·         establish an effective countrywide virtual education system,

·         evaluate universities and university staff on the quality of academic output

·         bolster merit-based promotion

·         stronger intellectual property rights.

·         boost public spending on education, including by

·         increase teacher compensation to improve education quality  

Agricultural reforms. 

·         land-use rights and well-designed exchange platforms for land operation rights.

·         improvements in access to finance in rural areas

• education and training for farmers, the pricing of natural resources and rural infrastructure.  

Source: OECD  “Better Policies” Series CHINA STRUCTURAL REFORMS FOR INCLUSIVE GROWTH MARCH 2014

OECD On Unemployment in Greece

The 2014 edition of the OECD Employment Outlook reviews recent labour market trends and short-term prospects in OECD and key emerging economies.  (OECD Employment Outlook Sept, 2014- http://www.oecd.org/greece/EMO-GRC-EN.pdf) 

It makes the following points on Greece:

• "Unemployment in Greece remains at its highest level since the onset of the crisis
• Despite moderate signs of recovery across many OECD countries in 2014, the unemployment rate in Greece remains stuck at close to its highest level since the onset of the economic crisis (27.2% as of May 2014).
• OECD projections suggest that the expected joblessness rate in Greece will remain high (around 27%) through to the end of 2015.
• ·         As of the first quarter of 2014, more than one in three unemployed persons had been out of work for 12 months or more across the OECD.
• ·         Greece shows one of the highest shares of long-term unemployment in the OECD. This has increased from 49% to 71% between Q4 2007 and Q1 2014."
• ·          "This trend is particularly worrisome for the hardship it imposes on the individuals concerned and their families. It also potentially contributes to a rise in structural unemployment as a result of skill depreciation and declining motivation to find a job. This could have potential ‘scarring’ effects on the long term career prospects of those experiencing long spells of unemployment.
• ·         Greece experienced one of the largest falls in real wages across OECD countries (more than 5% per year on average since the first quarter of 2009). The private sector was hit hard by wage cuts (-3.4% per year) but these cuts were also experienced in the public sector (-1.9% per year). While the sharp decline of wages contributed to partially reverse the gap in unit labour costs with Germany, and restore external competitiveness, hourly labour productivity growth has remained stubbornly negative since the onset of the crisis.  "

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OECD Report on India , 2014 critical of the economy...

Main findings
Improving the macroeconomic framework to support sustainable and inclusive growth.

, growth faltered between 2012 and2014 as gains from past reforms diminished, and fiscal and monetary stimuli could nolonger be sustained due to high inflation and current account deficit.

As fiscal and monetary policies have been gradually tightened, the fiscal
deficit and inflation have started to decline while the current account deficit has narrowed.

Activity has rebounded in 2014 and is projected to accelerate but the implementation of
reforms is critical. The government efforts to simplify regulations and administrative
procedures should enhance rule of law. Still-high inflation, the fiscal deficit, rising nonperforming
loans, and structural bottlenecks are also key downside risks. Large energy and
fertiliser subsidies and delays in passing key tax reforms constrain the public investment
in physical and social infrastructure, including education and health, needed for long-term
growth and lower inequalities.
Raising employment and valued added from the manufacturing sector. The
manufacturing sector could contribute more to income, export and employment growth. In
recent years, structural bottlenecks have affected the manufacturing sector more than
services. Labour and tax regulations are complex and raise cost of doing business above a
certain size. Manufacturing firms therefore tend to be small and their productivity is low.
Firms often cannot find employees with the right education and training. Frequent power
outages, difficulty in acquiring land and poor transport infrastructure also make it difficult
for firms to be competitive and reach new markets.

Increasing female economic participation. Creating more and better employment for
women has a high growth potential. Female economic participation is low, reducing
growth and living standards. Many women work in marginal jobs and have much lower pay
than men. A host of factors constrain women in the labour market, including cultural
norms, safety concerns, lack of child care and poor infrastructure. At the same time, high
unemployment among educated women, revealed preference for work in surveys, and low
net job creation point to demand problems.
Improving health outcomes for all. Health outcomes have improved substantially but
remain below countries at a similar level of development. Lack of access to a clean water
supply, nutrition deficiencies and smoking all lower health but the recent initiative on
sanitation should help. And when they fall sick, most Indians do not have access to high
quality medical services. The low level of public resources invested in health, the lack of
health care professionals, poor regulation of health services, large out-of-pocket payments
and inequality in access to health care are serious issues, in particular for the poor and
those living in rural areas and urban slums.EXECUTIVE SUMMARY
OECD ECONOMIC SURVEYS: INDIA © OECD 2014 11