OECD economic outlook.

237 Pages·1993·26.905 MB·English

by  OECD

ERRATA
OECD ECONOMIC OUTLOOK No. 54
(12 93 54 1) ISBN 92-64-14045-X
Please note the following corrections:
Page 83: The arrows in the panel titled "Output" in the Figure in the Country Note for
Canada are reversed. The red curve should be titled "GDP: ratio to trend", while the green
curve should be titled "Capacity utilisation rate."
Page 189: Replace Table A65. Productivity in the business sector on by the following:
Table A 65. Productivity in the business sector
Percentage changes atannual rates
Totalfactorproductivity0 Labourproductivity* Capitalproductivity
1960---73 1974-79 19X0-91 ! 1960'-13 1974-79 19R0-91-* 1960'-73 1974-79 1980-91'
United States 1.6 -0.4 0.3 2.2 0 0.8 0.1 -1.3 -0.7
Japan 5.5 1.3 1.8 8.3 2.9 2.9 -2.8 -3.4 -1.5
Germany" 2.6 1.8 1.0 4.5 3.1 1.6 -1.4 -1.0 -0.4
France 3.9 1.7 1.4 5.4 3.0 2.3 0.9 -1.0 -0.4
Italy 4.4 2.1 1.2 6.3 2.9 1.8 0.4 0.3 -0.2
United Kingdom 2.3 0.6 1.3 3.6 1.6 2.0 -0.6 -1.5 -0.1
Canada 2.0 0.8 0 2.8 1.5 1.1 0.6 -0.5 -2.1
Austria 3.3 1.2 0.9 5.8 3.2 2.0 -2.0 -3.1 -1.5
Belgium 3.9 1.4 1.4 5.2 2.8 2.3 0.6 -1.8 -0.7
Denmark 2.8 1.1 1.4 4.3 2.6 2.3 -1.0 -2.4 -0.8
Finland 3.3 1.6 2.1 4.9 3.2 3.2 0 -1.8 -0.5
Greece 5.8 2.1 0.5 8.8 3.3 0.9 -8.8 -4.2 -1.8
Ireland 3.7 2.4 3.3 4.9 3.4 4.2 -0.8 -1.8 -0.1
Netherlands 3.4 1.8 0.8 4.8 2.8 1.3 0.6 -0.2 -0.2
Norway-' 2.2 -1.6 0 3.7 -0.5 1.2 -0.1 -3.2 -1.9
Portugal 5.0 -0.4 1.0 7.5 0.5 1.7 -0.6 -2.5 -0.7
Spain 3.4 1.0 1.9 6.0 3.3 2.8 -3.6 -5.1 -0.8
Sweden 2.7 0.4 0.6 4.1 1.5 1.3 -0.8 -2.3 -1.4
Switzerland 2.0 -0.4 0.4 3.2 0.8 1.0 -1.4 -3.5 -1.3
Australia 2.4 1.2 0.6 2.9 2.2 1.1 1.5 -0.8 -0.2
New Zealand 0.7 -2.0 0.4 1.6 -1.3 1.4 -0.7 -3.2 -1.3
OECDEurope* 3.3 1.4 1.2 5.1 2.6 2.0 -0.7 -1.4 -0.5
OECD« 2.9 0.6 0.9 4.3 1.6 1.6 -0.6 -1.7 -0.8
a) TFPgrowthisequaltoaweightedaverageofthegrowthinlabourandcapitalproductivity.Thesample-periodaveragesforcapital
andlaboursharesareusedas weights.
b) Outputperemployedperson.
c) Orearliestyearavailable,i.e. 1961fortheUnitedKingdom,Finland,GreeceandIreland;1962forJapanandNewZealand;1963for
FranceandSweden; 1964forSpain; 1966forCanadaandNorwayand 1970forBelgiumand theNetherlands.
d) Orlatestavailableyear,i.e. 1992fortheUnitesStates,Germany,France,theUnitedKingdom,theNetherlandsandNewZealand;
1990forAustria,Belgium,Ireland,Norway,PortugalandSpain.
e) WesternGermany.
f) Mainlandbusinesssector(i.eexcluding shippingaswellascrudepetroleumandgasextraction).
g) Aggregateswerecalculatedonthebasisof1990GDPforthebusiness sectorexpressedin 1990purchasingpowerparities.
OECD
ECONOMIC
OUTLOOK
54
DECEMBER 1993
ORGANISATIONFORECONOMICCO-OPERATIONANDDEVELOPMENT
The OECD Economic Outlook
providesaperiodic assessmentofeconomic trends, prospectsandpolicies in OECD countries.
Itappearstwiceayear, inJuneandDecember.
Each number contains an overall analysis of the latest economic trends and short-term
projections. This survey is the joint work ofmembers ofthe Secretariat ofthe Economics
Department. The journal also occasionally contains special studies by members of the
Department or other parts of the Organisation designed to assist the interpretation of
economic trends. A statistical annex is included. The French version ofthe OECD Economic
Outlook is entitledPerspectiveséconomiques del'OCDE.
The OECD Economic Outlook ispublishedon the responsibility ofthe Secretary-General. The
assessments given ofcountries' prospects do not necessarily correspond to those ofthe
nationalauthorities concerned.
TheOrganisationforEconomic Co-operationandDevelopment(OECD)
was setup undera Convention signed in Paris on 14December 1960, whichprovides that the
OECD shallpromotepoliciesdesigned:
toachieve the highestsustainable economic growth andemploymentanda rising standard
ofliving in Membercountries while maintainingfinancial stability, and thus to contribute
to thedevelopmentoftheworldeconomy;
to contribute to soundeconomic expansion inMemberas wellasnon-membercountries in
theprocess ofeconomicdevelopment; and
to contribute to the expansionofworldtrade ona multilateral, non-discriminatory basis in
accordance with internationalobligations.
The original Member countries ofthe OECD are: Austria, Belgium, Canada, Denmark,
France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway,
Portugal, Spain, Sweden, Switzerland, Turkey, the UnitedKingdomandthe UnitedStates. The
following countries became Members subsequently through accession at the dates indicated
hereafter: Japan (28 April 1964), Finland (28 January 1969), Australia (7 June 1971) and
NewZealand(29May 1973). The Commissionofthe European Communities takespart in the
workofthe OECD (Article 13 ofthe OECD Convention).
© OECD, 1993
Applicationforpermissiontoreproduceortranslate
allorpartofthis publication shouldbemadeto:
HeadofPublications Service, OECD
2,rueAndré-Pascal, 75775 PARIS CEDEX 16, France.
TABLE OF CONTENTS
iNTRODLCTION
OECD ECONOMIC OUTLOOK AND POLICIES
General Assessment of the Macroeconomic Situation 1
Recent Trends and Prospects 2
Main Forces Shaping Activity 6
Risks Emerging in the Current Situation 11
Macroeconomic Policies 14
Appendix: The Effects of Yen Appreciation 21
Implications of Financial Stress for Economic Recovery 24
Some Measures to Improve the Quality of Government Spending 32
DEVELOPMENTS IN INDIVIDUAL OECD COUNTRIES 47
United States 47 Australia 85 Iceland 95 Portugal 104
Japan 53 Austria 86 Ireland 96 Spain 105
Germany 59 Belgium 88 Luxembourg 98 Sweden 107
France 66 Denmark 90 Netherlands 99 Switzerland 109
Italy 71 Finland 92 New Zealand 101 Turkey 111
United Kingdom 76 Greece 93 Norway 102
Canada 81
DEVELOPMENTS IN SELECTED NON-OECD COUNTRIES 113
Central and Eastern European Countries and the Newly Independent States of the Former Soviet
Union 113
Other Areas 118
STATISTICAL ANNEX 123
Reference Statistics and Annual Projections 125
Semiannual Projections for Demand, Output and Inflation in the Seven Major Countries 175
Other Background Data and Figures 183
TECHNICAL ANNEX 201
Sources and Methods 201
Country Classification 211
NOTE ON STATISTICAL TREATMENT OF GERMANY
Inthispublication,datauptoend-1990areforwesternGermanyonly;unlessotherwise indicated,theyareforthe
wholeofGermany from 1991 onwards. In tables showingpercentagechangesfromthepreviousyear, data refertothe
whole ofGermany from 1992 onwards.
TRADE STATISTICS FOR EC COUNTRIES IN 1993
AsfromJanuary 1993,anewsystem ofdatacollectionforintra-ECtrade(1NTRASTAT)hasbeenputinplacein
ECMembercountries.Tradedatahavebeenestimatedforthesecountriesfor 1993inthispublicationbyusingnational
accounts data, and should therefore be interpreted with great caution.
TABLES
TABLES IN TEXT
INTRODUCTION
Summary ofprojections
OECD ECONOMIC OUTLOOK AND POLICIES
GeneralAssessment ofthe Macroeconomic Situation
1. Output gaps (cid:9) 2
2. Contributions to changes in real GDP growth (cid:9) 3
3. Trade and current-account balances (cid:9) 6
4. Shares ofworld trade in manufactures (cid:9) 6
5. Changes in general government financial balances (cid:9) 9
6. Trade summary (cid:9) 9
7. Genera] government financial balances (cid:9) 14
8. Central government financial balances (cid:9) 14
9. Structural component ofgeneral government financial balances(cid:9) 15
10. Medium-term fiscal consolidation targets (cid:9) 15
11. Achieving stable general government debt ratios (cid:9) 17
12. Technical assumptions underlying simulations(cid:9) 22
13. Simulated impact ofchanges in the yen exchange rate (cid:9) 22
Implications ofFinancial StressforEconomic Recovery
14. Commercial property market developments (cid:9) 25
15. Corporate sector debt and interest payments, selected countries (cid:9) 28
Some Measures to Improve the Quality ofGovernment Spending
16. General government outlays (cid:9) 33
17. Government purchases from the private sector (cid:9) 35
18. Examples of cost savings from contracting out public activities (cid:9) 36
19. Examples ofrecent pay reforms by country (cid:9) 38
20. Private inputs and infrastructure investment (cid:9) 39
21. Government outlays by function (cid:9) 44
DEVELOPMENTS IN INDIVIDUAL OECD COUNTRTES
Standard tables in the Countly Notes
Major OECD countries
Demand and output
Employment, income and inflation
Financial indicators
External indicators
Other OECD countries
Demand, output and prices
Supplementary tables
United States
Recent projections for the federal budget deficit (cid:9) 51
Germany
Public sector financial balances (cid:9) 63
Projections for western and eastern Germany (cid:9) 64
DEVELOPMENTS IN SELECTED NON-OECD COUNTRIES
CentralandEastern European Countries andthe Newly Independent States ofthe Former Soviet Union
22. Unemployment (cid:9) 113
23. General government budget balances (cid:9) 115
24. Inflation (cid:9) 115
25. Current balances (cid:9) 117
26. Trade flows (cid:9) 117
27. Real GDP (cid:9) 117
OtherAreas
28. Dynamic Asian economies: key economic variables(cid:9) 118
29. Dynamic Asian economies: exports by country and region (cid:9) 119
30. Latin America: key economic variables (cid:9) 121
TABLES IN BOXES
Inflation in OECD countries (cid:9) 4
Simulated impact of the recent yen appreciation (cid:9) 10
Exporters' response to large appreciations: three cases(cid:9) 10
Currency depreciation and domestic inflation in selected countries (cid:9) 12
Previous and current weighting schemes (cid:9) 124
Growth of real GDP and the GDP deflator in 1992 (cid:9) 124
LISTS OF TABLES IN STATISTICALANNEX
Reference Statistics andAnnualProjections (Tables Al to A49) (cid:9) 125
SemiannualProjectionsforDemand, OutputandInflation in the Seven Major Countries (Tables A50 to A61) . . 175
Other BackgroundData andFigures (Tables A62 to A73) (cid:9) 183
FIGURES
FIGURES IN TEXT
OECD ECONOMIC OUTLOOK AND POLICIES
GeneralAssessment ofthe Macroeconomic Situation
1. Patterns of business cycles in the OECD area (cid:9) 1
2. Interest rates (cid:9) 5
3. Business climate and consumer confidence (cid:9) 7
4. Net household saving (cid:9) 11
5. Inflation developments (cid:9) 13
6. Government borrowing and debt, 1989 and 1993 (cid:9) 16
7. German monetary indicators (cid:9) 18
8. Exchange rates ofEuropean currencies against the Deutschemark (cid:9) 18
9. Growth ofbank credit (cid:9) 20
10. Credit conditions in Japan (cid:9) 20
11. Simulated effect ofthe yen appreciation on the Japanese economy (cid:9) 23
Implications ofFinancial StressforEconomic Recovery
12. Asset prices (cid:9) 26
13. Developments in household-sector debt ratios (cid:9) 27
14. Corporate sector financing (cid:9) 29
Some Measures to Improve the Quality ofGovernment Spending
15. Price of general government investment, PPP adjusted (cid:9) 41
DEVELOPMENTS IN INDIVIDUAL OECD COUNTRIES
Standardfigures in Country Notes
Major OECD countries
Selected recent indicators
DEVELOPMENTS IN SELECTED NON-OECD COUNTRIES
Centraland Eastern European Countries andthe Newly Independent States ofthe Former Soviet Union
16. Industrial production (cid:9) 114
LIST OF FIGURES IN STATISTICALANNEX
Other BackgroundData and Figures (Figures Al to A3) (cid:9) 183
CONVENTIONAL SIGNS
$ US dollar Decimal point
c US cent I, II Calendar half-years
£ Pound sterling Ql, Q4 Calendar quarters
mbd Million barrels per day Billion Thousand million
Data not available Trillion Thousand billion
0 Nil or negligible s.a.a.r. Seasonally adjusted at annual rales
- Irrelevant n.s.a. Not seasonally adjusted
Introduction
The outlook An increasingly solid expansion is under way in North America, and moderate, if
unspectacular recoveries are continuing in the United Kingdom, Australia, New
Zealand and some smaller European countries. For the remainder of the OECD area
taken together, activity continues to be disappointingly weak, and household and
business confidence are typically depressed. In most ofcontinental Europe lhe recov¬
ery that was projected last spring is not yet apparent, although there are some indica¬
tions that, with the possible exception of Germany, the trough has been reached. In
lapan economic activity has renewed its decline.
The forces that have underpinned recoveiy in the English-speaking countries, in
particular significant falls in interest rates, should have an increasingly positive impact
in continental Europe during 1994. In Japan, however, where the depressive effects of
yen appreciation are being felt strongly and the negative effects of balance-sheet
adjustment are easing slowly, recovery may be more gradual. Overall, output growth
in the area may rise slowly, from about 1 per cent in 1993 (the third year in which it
has been well below potential) to perhaps just over 2 per cent in 1994 and close to
3 per cent in 1995. Global activity has been - and will continue to be - supported by
buoyant growth in a number of non-OECD countries, particularly in Asia.
Inflation has fallen to low levels and is likely to come down somewhat further
during the coming two years. By 1995, it is projected to be 3 per cent or less in 20
OECD countries, an inflation performance throughout the area which compares
favourably with that of the early 1960s, often remembered as a period of reasonable
price stability. The emerging very favourable price situation, if sustained, will help to
establish an economic environment more conducive to sustainable increases in pro¬
ductive investment, output, and employment than has existed since the early 1960s.
Unemployment is nigh and, during the recent downturn, it has increased in most
countries, especially in continental Europe. Unemployment is likely to fall somewhat
in North America, but it could approach 35 million people in the OECD area as a
whole during 1994 and mayfall only marginally thereafter. This has putpolicy makers
under considerable political pressure to act onjobs. The challenge they face is to find
policy responses that yield results quickly but that also promise durable gains.
Macroeconomic policy The background to the setting offiscalpolicy in the current situation is the need
requirements to contain and reverse the steady build-up ofpublic debt in most countries, which has
severely circumscribed the scope for any fiscal support to activity. Between 1979 and
1992 average OECD gross public debtrose from 41 per cent ofGDP to around 63 per
Summary ofprojections"
Seasonally adjusted at annual rates
1993 1994 1995
1993 1994 1995
1 il
Percentagecha ges from previous perioc
Real GDP
United States 2.8 3.1 2.7 2.3 2.8 3.3 2.y 2.7 2.5
Japan -0.5 0.5 2.3 0.6 -1.7 0.8 2.4 2.2 2.6
Germany -1.5 0.8 2.2 -4.2 2.1 -0.6 2.4 2.0 2.6
OECD Europe -0.2 1.5 2.6 -0.8 1.0 1.3 2.4 2.5 2.8
Total OECD 1.1 2.1 2.7 0.8 1.4 2.1 2.7 2.6 2.7
Inflation''
United Stales 2.6 2.4 2.6 3.2 2.0 2.5 2.5 2.6 2.8
Japan 1.0 0.7 0.7 0.6 0.9 0.6 0.7 0.7 0.7
Germany 4.0 2.9 2.0 4.0 3.2 3.2 2.2 2.0 1.8
OECD Europe (excludingTurkey) 3.2 3.0 2.5 3.3 3.1 3.1 2.d 2.5 2.3
Total OECD (excluding Turkey)' 2.5 2.3 2,2 2.7 2.3 2.4 2.3 2.2 2.2
Total OECD 3.3 3,2 3.1 3.4 3.1 3.3 3.3 3.1 2.9
Percentoflabourforce
Unemployment
United States 6.9 6.5 6.2 7.0 6.8 6.6 6.4 6.2 6.1
Japan 2.5 2.9 2.8 2.4 2.6 2.8 2.9 2.9 2.8
Germany 8.9 10.1 10.3 8.5 9.3 10.0 10.1 10.3 10.3
OECD Europe 10.7 11.4 11.5 10.4 11.0 11.4 11.5 11.5 11.5
Total OECD 8.2 8.5 8.4 8.1 8.3 8.5 8.4 8.4 8.3
Short-term interest rates'
United States 3.0 4.2 5.0 3.0 3.0 3.7 4.7 5.0 5.1
Japan 2.9 2.b 2.7 3.3 2.5 2.5 2.Ö 2.6 2.8
Germany 7.3 5.0 3.8 8.0 6.6 5.5 4.5 3.9 3.8
Major4 European countries'' 8.1 5.8 5.1 9.0 7.2 6.2 5.5 5.2 5.1
PercentofGDP
Government budget balances'
United States -3.6 -2,7 -2.1
Japan -1.0 -2.0 -2.4
Germany -4.0 -3.5 -2.7
OECD Europe' -6.8 -6.3 -5.6
Total OECD* ^1.6 ^1.2 -3.6
Percent ofGDP
Current balances
United States -1.7 -2.0 -2.1 -1.6 -1.8 -1.9 -2.0 -2.1 -2.1
Japan 3.3 3.1 3.0 3.3 3.3 3.2 3.0 3.0 3.0
Germany -1.1 -0.8 -0.7 -1.1 -1.1 -0.8 -0.8 -0.7 -0.6
OECD Europe -0.1 0.2 0.6 -0.1 -0.1 0.1 0.4 0.5 0.6
Total OECD 0 -0.1 0 0 0 -0.1 -0.1 0 0
Percentagechangesfrompreviousperiod
World trade* 2.6 5.4 6.4 0.9 4.3 5.6 b.l 6.4 6.7
a) Assumptions underlyingtheprojections include:
- nochange inactual andannouncedpolicies;
- unchangedexchangerates from2 November 1993; in particularSI =Y 108.17, DM 1.70;
- dollarprice (OECDfobimports)forinternationallytradedoil of$15 perbarrel for 1993: 11, andconstant inreal termsthereafter;
- thecut-offdateforotherinformationused inthecompilationoftheprojectionswas9November 1993.
b) GDPdeflator.
c) UnitedStales: 3-month Treasury bills;Japan: 3-6 monthCD; Germany,France, Italy, United Kingdom: 3-monlhinterbankrales.
d) Unweighted averageofGermany, France, Italy andtheUnitedKingdom.
e) General governmentfinancial balances.
f) ExcludingIceland,Luxembourg. SwitzerlandandTurkey.
g) ExcludingIceland,Luxembourg. NewZealand,SwitzerlandandTurkey.
h) Arithmeticaverageofthegrowth ratesofworldimport volumesand worldexportvolumes.