OECD Economic Outlook: 59, June 1996

241 Pages·1996·34.561 MB·English

by  OECD

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OECD
ECONOMIC
OUTLOOK
59
JUNE 1996
ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT
The Organisation for Economic Co-operation and Development (OECD)
was set up under a Convention signed in Paris on 14 December I960, which provides that the OECD shall
promote policies designed:
- to achieve thehighestsustainable economicgrowth andemployment anda risingstandardofliving in Member
countries while maintaining financial stability, and thus to contribute to the development of the world
economy;
- to contribute to sound economic expansion in Member as well as non-member countries in the process of
economic development; and
- to contribute to the expansion ofworld trade on a multilateral, non-discriminatory basis in accordance with
international obligations.
The original Member countries of the OECD are: Austria, Belgium, Canada, Denmark, France, Germany,
Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland,
Turkey, the United Kingdom and the United States. The following countries became Members subsequently
through accession at the dales indicatedhereafter: Japan (28April 1964), Finland (28January 1969), Australia
(7 June 1971), New Zealand (29 May 1973), Mexico (18 May 1994), the Czech Republic (21 December 1995)
andHungary (7May 1996). The Commission ofthe European Communities takespart in the work ofthe OECD
(Article 13 ofthe OECD Convention).
© OECD 1996
Application lor permission lo reproduce or translate
all or part of this publication should be made to:
Head of Publications Service, OECD
->, rue André-Pascal, 75775 PARIS CEDEX 16, France.
FOREWORD
The OECD Economic Outlook provides a periodic assessment of economic trends, prospects and policies in
OECD countries. It appears twice a year, in June and December.
Each issue contains an overall analysis of the latest economic trends and short-term projections. This survey is
the joint work of members of the Economics Department. The journal also occasionally contains special studies by
members of the Department or other divisions of the Organisation designed to assist the interpretation of economic
trends. Reference statistics are included. The French version ofthe OECD Economic Outlook is entitled Perspectives
économiques de l'OCDE.
The OECD Economic Outlook is published on the responsibility of the Secretary-General of the OECD. The
assessments given ofcountries' prospects do not necessarily correspond to those ofthe national authorities concerned.

TABLE OF CONTENTS
INTRODUCTION
OECD ECONOMIC OUTLOOK AND POLICIES
General Assessment of the Economic Situation 1
Recent Developments and Prospects 1
Macroeconomic Policy Requirements in the Current Situation U
Medium-term Macroeconomic Policy Issues 16
Labour Market Performance, Budget Control and Social Transfers 23
The Influence ofFinancial Market Fluctuations on the Current Economic Expansion 28
The Experience.with Fiscal Consolidation in OECD Countries 33
Interactions between Structural Reform, Macroeconomic Policy and Economic Performance 42
DEVELOPMENTS IN INDIVIDUAL OECD COUNTRIES 59
United States 59 Australia 97 Luxembourg 115
Japan 65 Austria 99 Mexico 116
Germany 71 Belgium 101 Netherlands 119
France 77 Czech Republic 102 New Zealand 120
Italy 82 Denmark 105 Norway 122
United Kingdom 87 Finland 107 Portugal 124
Canada 92 Greece 108 Spain 125
Hungary 110 Sweden 127
Iceland 113 Switzerland 128
Ireland 114 Turkey 130
DEVELOPMENTS IN SELECTED NON-OECD COUNTRIES 133
Central and Eastern Europe, Russia and Ukraine 133
Dynamic Asian Economies and China 136
Central and South America 139
\NNE\ Al
Country Classification A2
Weighting Scheme for Aggregate Measures A2
Reference Statistics and Annual Projections A3
Other Background Data A57
Sources and Methods A73
NOTE ON STATISTICAL TREATMENT OF HUNGARY
In this issue, aggregate measures for OECD Europe and total OECD do not include Hungary.
LIST OF BOXES
OECD ECONOMIC OUTLOOK AND POLICIES
GeneralAssessment ofthe Economic Situation
The impact ofUS national accounts revisions (cid:9) 2
Policy and other assumptions underlying the projections (cid:9) 5
Confidence indicators and economic activity(cid:9) 9
Productivity growth and employment (cid:9) 22
DEVELOPMENTS IN INDIVIDUAL OECD COUNTRIES
The Czech Republic (cid:9) 104
Hungary (cid:9) ill
DEVELOPMENTS IN SELECTED NON-OECD COUNTRIES
The effects ofexchange rate appreciation in the Dynamic Asian Economies (cid:9) 138
LIST OF NUMBERED TABLES AND FIGURES
OECD ECONOMIC OUTLOOK AND POLICIES
GeneralAssessmentofthe Economic Situation
Table
1. Demand and output (cid:9) 2
2. Movements in nominal exchange rates ofselected OECD countries (cid:9) 3
3. Changes in real effective exchange rates in selected countries since 1991 (cid:9) 3
4. Inflation and labour market developments (cid:9) 6
5. World trade and payments summary (cid:9) 7
6. The fiscal outlook (cid:9) 13
7. Ouput gaps in selected OECD countries(cid:9) 14
8. Long-term interest rale differentials vis-à-vis Germany in EU countries (cid:9) 16
9. Interest rate assumptions in alternative fiscal consolidation scenarios (cid:9) 20
10. Impact on non-OECD regions' current account of simultaneous fiscal consolidation in OECD countries (cid:9) 20
11. Numerical inflation objectives: selected countries (cid:9) 21
12. Estimated impact of ageing population on government expenditure on pensions and health care(cid:9) 25
13. Employment-to-population ratios for men aged 55-64 (cid:9) 26
Figure
1. Interest rates (cid:9) 4
2. Business climate and consumer confidence (cid:9) 8
3. Real money market interest rates(cid:9) 10
4. Differentials between lending rates and money market rates (cid:9) 12
5. Impact offiscal consolidation (cid:9) 18
6. Output per working-age person and per employed worker, 1980-95 (cid:9) 22
7. Labour market performance, public expenditure and taxation (cid:9) 24
The Influence ofFinancialMarketFluctuations on the CurrentEconomic Expansion
Figure
8. Real long-term interest rates (cid:9) 29
9. Monetär)' conditions indexes (cid:9) 31
The Experience with Fiscal Consolidation in OECD Countries
Table
14. Fiscal consolidation episodes during the past 20 years in OECD countries(cid:9) 34
15. Key economic indicators prior to fiscal consolidation (cid:9) 35
16. How consolidation was achieved (cid:9) 36
17. Financial market developments (cid:9) 37
18. Saving behaviour (cid:9) 38
19. Macroeconomic developments during consolidation(cid:9) 39
Figure
10. Output growth during fiscal consolidation processes (cid:9) 40
Interactions between Structural Reform, Macroeconomic Policy andEconomic Performance
Table
20. Producer subsidy equivalents (cid:9) 46
21. Indicators of barriers to trade (cid:9) 52
22. Overall tax wedges 1979-94 (cid:9) 53
Figure
1 1. Anti-dumping actions outstanding (cid:9) 52
12. Indicator ofbenefit entitlements, 1961-95(cid:9) 54
DEVELOPMENTS IN SELECTED NON-OECD COUNTRIES
CentralandEastern European Countries, Russia and Ukraine
Table
23. European economies in transition and the Russian Federation: key economic indicators (cid:9) 134
24. Ukraine and the Baltics: key economic indicators (cid:9) 134
Dynamic Asian Economies and China
Table
25. China and the Dynamic Asian Economies: key economic indicators (cid:9) 137
Central and South America
Table
26. Central and South America: key economic indicators (cid:9) 140
ANNEX
Reference Statistics andAnnualProjections
Annex Table
Demand and Output
1. Real GDP (cid:9) A4
2. Nominal GDP (cid:9) A5
3. Real private consumption expenditure (cid:9) A6
4. Real public consumption expenditure (cid:9) A7
5. Real total gross fixed capital formation (cid:9) A8
6. Real gross private non-residential fixed capital formation (cid:9) A9
7. Real gross private residential fixed capital formation (cid:9) A10
8. Real total domestic demand (cid:9) All
9. Real exports ofgoods and services (cid:9) A12
10. Real imports of goods and services (cid:9) A13
1 1. Output gaps (cid:9) A14
Wages, Costs andInflation
12. Compensation per employee in the business sector(cid:9) A15
13. Unit labour costs in the business sector(cid:9) A16
14. GDP deflators (cid:9) A17
15. Private consumption deflators(cid:9) A18
16. Consumer prices (cid:9) A19
17. Oil and other primary commodity markets (cid:9) A20
Labour Force, Employment and Unemployment
18. Labour force (cid:9) A21
19. Labour force participation rales (cid:9) A22
20. Employment (cid:9) A23
21. Unemployment rates: commonly used definitions (cid:9) A24
22. Standardised unemployment rates (cid:9) A25
23. Labour force, employment and unemployment (cid:9) A26
Business Sector
24. Capital income shares in the business sector (cid:9) A27
25. Rates ofreturn on capital in the business sector(cid:9) A28
Saving
26. Household saving rates (cid:9) A29
27. Gross national saving (cid:9) A30
Fiscal Balances andPublic Indebtedness
28. General government total outlays (cid:9) A31
29. General government current receiptsr(cid:9) A32
30. General government financial balances (cid:9) A33
31. General government structural balances(cid:9) A34
32. General government primary balances (cid:9) A35
33. General government net debt interest payments (cid:9) A36
34. General government gross financial liabilities (cid:9) A37
35. General government net financial liabilities (cid:9) A38
Interest Rales and Exchange Rates
36. Short- and long-term interest rates (cid:9) A39
37. Nominal exchange rates (vis-à-vis the US dollar) (cid:9) A40
38. Effective exchange rates (cid:9) A4]
External Trade and Payments
39. Export volumes (cid:9) A42
40. Import volumes (cid:9) A43
41. Export prices (average unit values) (cid:9) A44
42. Import prices (average unit values) (cid:9) A45
43. Competitive positions: relative unit labour costs(cid:9) A46
44. Competitive positions: relative export prices (cid:9) A47
45. Export performance for total goods (cid:9) A48
46. Shares in world exports and imports (cid:9) A49
47. Trade balances (cid:9) A50
48. Non-factor services, net(cid:9) A51
49. Investment income, net (cid:9) A52
50. Current account balances (cid:9) A53
51. Current account balances as a percentage ofGDP (cid:9) A54
52. Structure ofcurrent account balances ofmajor world regions (cid:9) A55
53. Stocks offoreign assets and liabilities(cid:9) A56
OtherBackgroundData
Annex Table
54. Semiannual demand and output projections (cid:9) A57
55. Semiannual price, cost and unemployment projections (cid:9) A60
56. Contributions to changes in real GDP in major OECD countries (cid:9) A62
57. Contributions to changes in real GDP in other OECD countries (cid:9) A63
58. Household saving, net wealth and indebtedness (cid:9) A66
59. Productivity in the business sector (cid:9) A68
60. Central government financial balances(cid:9) A68
61. Maastricht definition of general government gross public debt (cid:9) A69
62. Monetary and credit aggregates: recent trends and targets (cid:9) A69
63. Export market growth and performance in manufactured goods (cid:9) A70
64. Geographical structure of OECD trade (cid:9) A71
Annex Figure
1. Recent consumer-price developments (cid:9) A59
2. Capacity utilisation in manufacturing (cid:9) A61
3. Real commodity prices (cid:9) A61
4. Measures ofrelative competitive position (cid:9) A64
5. Stock prices and long-term interest rates (cid:9) A67
LIST OF OTHER TABLES AND FIGURES
INTRODUCTION
Table
Summary ofprojections
GENERAL ASSESSMENT OF THE ECONOMIC SITUATION
Table (in box)
Correlation between business and consumer confidence and output
DEVELOPMENTS IN INDIVIDUAL OECD COUNTRIES
Standard Tables in the Country Notes
Major OECD Countries
Demand and output
Employment, income and inflation
Financial indicators
External indicators
Other OECD countries
Demand, output and prices
Supplementary Tables in the Country Notes
United States
Recent projections for the federal budget deficit(cid:9) 63
Germany
Public sector financial balances (cid:9) 75
StandardFigures in lite Country Notes
Major OECD Countries
Selected recent indicators
Table (in box)
The Czech economy in perspective, 1994 (cid:9) 105
The Hungarian economy in perspective, 1994 (cid:9) 112
DEVELOPMENTS IN SELECTED NON-OECD COUNTRIES
Table (in box)
Impact of a 10 per cent nominal exchange rale appreciation in the ANIEs (cid:9) 138
ANNEX
Table
GDP weights used in calculating main aggregates (cid:9) A2
CONVENTIONAL SIGNS
S US dollar Decimal point
c US cent I, II Calendar half-years
£ Pound sterling Q1.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 rates
- Irrelevant n.s.a. Not seasonally adjusted