OECD Economic Outlook: 62, December 1997

162 Pages·1997·1.248 MB·English

by  OECD

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OECD
ECONOMIC
OUTLOOK
62
DECEMBER 1997
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 1960, which provides that the OECD shall
promote policies designed:
– to achieve the highest sustainable economic growth and employment and a rising standard of living 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 of world 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 dates indicated hereafter: Japan (28 April 1964), Finland (28 January 1969), Australia
(7 June 1971), New Zealand (29 May 1973), Mexico (18 May 1994), the Czech Republic (21 December 1995),
Hungary (7 May 1996), Poland (22 November 1996) and the Republic of Korea (12 December 1996). The
Commission of the European Communities takes part in the work of the OECD (Article 13 of the OECD
Convention).
(cid:211) OECD 1997
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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 of the OECD Economic Outlook is entitled Perspectives
e´conomiques de l’OCDE.
The OECD Economic Outlook is published on the responsibility of the Secretary-General of the OECD. The
assessments given of countries’ prospects do not necessarily correspond to those of the national authorities concerned.
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TABLE OF CONTENTS
INTRODUCTION xi
OECD ECONOMIC OUTLOOK AND POLICIES 1
General Assessment of the Macroeconomic Situation 1
Recent Economic Developments and Prospects 1
Policy Requirements in the OECD Area 12
Medium-Term Developments in the OECD Area 35
Towards a New Global Age: Long-Term Scenarios to 2020 40
Income Distribution and Poverty in Selected OECD Countries 49
DEVELOPMENTS IN INDIVIDUAL OECD COUNTRIES 61
United States 61 Australia 97 Luxembourg 116
Japan 67 Austria 99 Mexico 117
Germany 72 Belgium 100 Netherlands 119
France 77 Czech Republic 102 New Zealand 121
Italy 82 Denmark 104 Norway 123
United Kingdom 87 Finland 105 Poland 124
Canada 92 Greece 107 Portugal 126
Hungary 109 Spain 128
Iceland 110 Sweden 130
Ireland 112 Switzerland 131
Korea 113 Turkey 133
DEVELOPMENTS IN SELECTED NON-OECD COUNTRIES 137
Central and Eastern European Countries 137
The Dynamic Asian Economies and China 140
Central and South America 145
ANNEX A1
Country Classification A2
Weighting Scheme for Aggregate Measures A2
Reference Statistics and Annual Projections A3
Other Background Data A56
v
LIST OF BOXES
OECD ECONOMIC OUTLOOK AND POLICIES
General Assessment of the Macroeconomic Situation
Policy and other assumptions underlying the projections .......................................... 4
The trade-related impact of financial turbulence in Southeast Asia on OECD countries..................... 6
Estimated effects of an appreciation of the euro................................................ 20
Trends in the share of wages in GDP ....................................................... 25
Effects of shorter working hours........................................................... 27
Faster growth with low inflation in the Unisted States? Some measurement issues ........................ 31
Income Distribution and Poverty in Selected OECD Countries
Data issues ......................................................................... 50
DEVELOPMENTS IN INDIVIDUAL OECD COUNTRIES
Fiscal policy assumptions underlying the projections (in all country notes)
Korea
Recent actions ....................................................................... 115
New Zealand
Monetary Conditions Indicator ............................................................ 122
LIST OF NUMBERED TABLES AND FIGURES
OECD ECONOMIC OUTLOOK AND POLICIES
General Assessment of the Macroeconomic Situation
Table
1. Contributions to changes in real GDP ................................................... 1
2. Changes in exchange rates ........................................................... 3
3. Merchandise trade between OECD countries and selected Asian countries, 1995 ..................... 7
4. Effective appreciation of OECD exchange rates due to movements in Southeast Asian currencies ......... 8
5. Inflation and labour market developments ................................................ 11
6. World trade summary .............................................................. 11
7. Current account balances ............................................................ 12
8. The fiscal outlook ................................................................. 13
9. Fiscal expansion and consolidation in Japan, 1992-99 ........................................ 15
10. Macroeconomic indicators and projections for the prospective euro area ........................... 19
11. Trade openess of countries in the prospective euro area ...................................... 21
12. GDP growth correlations with the prospective euro area ...................................... 21
13. Sensitivity of fiscal deficits to changes in output gaps in selected European countries.................. 24
Figure
1. Interest rates..................................................................... 2
2. Stock markets.................................................................... 5
3. Output gaps in OECD countries ....................................................... 10
4. Monetary conditions in Japan......................................................... 16
5. Macroeconomic effects of slower growth in the prospective euro area ............................ 22
6. Wage shares in total business sector, 1960-96 ............................................. 26
7. US inflation and labour costs ......................................................... 29
Medium-Term Developments in the OECD Area
Table
14. Medium-term reference scenario summary ................................................ 36
15. Fiscal trends in the medium-term reference scenario ......................................... 38
Figure
8. Medium-term reference scenario ....................................................... 37
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Towards a New Global Age: Long-Term Scenarios to 2020
Table
16. Key assumptions underlying the ‘‘business-as-usual’’ and ‘‘high-performance’’ scenarios ............... 42
17. GDP growth scenarios.............................................................. 44
18. Non-OECD convergence rates ........................................................ 46
Figure
9. Shares of world population .......................................................... 41
10. Shares of world GDP .............................................................. 43
11. GDP per capita................................................................... 45
Income Distribution and Poverty in Selected OECD Countries
Table
19. Aggregate inequality indicators before and after taxes and transfers .............................. 51
20. Distribution of income components across income groups ..................................... 52
21. Transfer and tax rates by income group.................................................. 53
22. Poverty rates .................................................................... 54
23. Relative disposable income, by degree of work attachment, age of household head and family type........ 55
24. Poverty rates before and after taxes and transfers, by degree of work attachment, age of household head
and family type .................................................................. 56
DEVELOPMENTS IN SELECTED NON-OECD COUNTRIES
Central and Eastern European Countries
Table
25. European Economies in Transition and the Russian Federation: key economic indicators ............... 138
26. Ukraine and the Baltic States: key economic indicators....................................... 140
The Dynamic Asian Economies and China
Table
27. Equity market and exchange rate developments in major Asian non-OECD countries during 1997......... 141
28. China and the Dynamic Asian Economies: key economic indicators .............................. 142
29. Merchandise trade between selected non-OECD East Asian countries ............................. 143
Central and South America
Table
30. Central and South America: key economic indicators ........................................ 146
ANNEX
Reference Statistics and Annual Projections
Annex Table
Demand and Output
1. Real GDP ...................................................................... A4
2. Nominal GDP.................................................................... A5
3. Real private consumption expenditure ................................................... A6
4. Real public consumption expenditure ................................................... A7
5. Real total gross fixed capital formation .................................................. A8
6. Real gross private non-residential fixed capital formation ..................................... A9
7. Real gross private residential fixed capital formation......................................... A10
8. Real total domestic demand .......................................................... A11
9. Real exports of goods and services ..................................................... A12
10. Real imports of goods and services..................................................... A13
11. Output gaps ..................................................................... A14
Wages, Costs and Inflation
12. Compensation per employee in the business sector .......................................... A15
13. Unit labour costs in the business sector.................................................. A16
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14. GDP deflators.................................................................... A17
15. Private consumption deflators ......................................................... A18
16. Consumer prices .................................................................. A19
17. Oil and other primary commodity markets................................................ A20
Labour Force, Employment and Unemployment
18. Labour force .................................................................... A21
19. Labour force participation rates ....................................................... A22
20. Employment..................................................................... A23
21. Unemployment rates: commonly used definitions ........................................... A24
22. Standardised unemployment rates ...................................................... A25
23. Labour force, employment and unemployment ............................................. A26
Business Sector
24. Capital income shares in the business sector .............................................. A27
25. Rates of return on capital in the business sector ............................................ A28
Saving
26. Household saving rates ............................................................. A29
27. Gross national saving .............................................................. A30
Fiscal Balances and Public Indebtedness
28. General government total outlays ...................................................... A31
29. General government current receipts .................................................... A32
30. General government financial balances .................................................. A33
31. General government structural balances .................................................. A34
32. General government primary balances ................................................... A35
33. General government net debt interest payments ............................................ A36
34. General government gross financial liabilities.............................................. A37
35. General government net financial liabilities ............................................... A38
Interest Rates and Exchange Rates
36. Short- and long-term interest rates...................................................... A39
37. Nominal exchange rates (vis-a`-vis the US dollar) ........................................... A40
38. Effective exchange rates ............................................................ A41
External Trade and Payments
39. Export volumes................................................................... A42
40. Import volumes................................................................... A43
41. Export prices (average unit values) ..................................................... A44
42. Import prices (average unit values) ..................................................... A45
43. Competitive positions: relative unit labour costs ............................................ A46
44. Competitive positions: relative export prices .............................................. A47
45. Export performance for total goods..................................................... A48
46. Shares in world exports and imports .................................................... A49
47. Trade balances ................................................................... A50
48. Non-factor services, net ............................................................. A51
49. Investment income, net ............................................................. A52
50. Current account balances ............................................................ A53
51. Current account balances as a percentage of GDP .......................................... A54
52. Structure of current account balances of major world regions .................................. A55
Other Background Data
Annex Table
53. Semiannual demand and output projections ............................................... A56
54. Semiannual price, cost and unemployment projections ....................................... A59
55. Contributions to changes in real GDP in major OECD countries ................................ A61
56. Contributions to changes in real GDP in other OECD countries................................. A62
57. Household saving, net wealth and indebtedness ............................................ A63
58. Productivity in the business sector ..................................................... A66
59. Central government financial balances................................................... A66
60. Maastricht definition of general government gross public debt .................................. A68
61. Monetary and credit aggregates: recent trends and targets ..................................... A68
62. Export market growth and performance in manufactured goods ................................. A69
63. Geographical structure of OECD trade .................................................. A70
viii
Annex Figure
1. Recent consumer-price developments ................................................... A58
2. Capacity utilisation in manufacturing ................................................... A60
3. Real commodity prices ............................................................. A60
4. Measures of relative competitive position ................................................ A64
5. Stock prices and long-term interest rates ................................................. A67
LIST OF OTHER TABLES AND FIGURES
Introduction
Table
Summary of projections............................................................. x
OECD ECONOMIC OUTLOOK AND POLICIES
General assessment of the macroeconomic situation
Table (in box)
Potential macroeconomic impact of the Southeast Asian financial turbulence on the OECD area .......... 6
Macroeconomic effects of a 10 per cent appreciation of the euro ................................ 20
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............................................ 64
Standard Figures in the Country Notes
Major OECD countries
Selected recent indicators
ANNEX
Table
GDP weights used in calculating main aggregates........................................... A2
CONVENTIONAL SIGNS
$ US dollar . Decimal point
c US cent I, II Calendar half-years
£ Pound sterling Q1, Q4 Calendar quarters
mbd Millions 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
ix