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THE GLOBAL ECONOMIC OUTLOOK Mark Baker ECO / MPD 8 September 2016
2
Global GDP growth remains subdued
0
0.5
1
1.5
2
2.5
3
3.5
4
Note: Provisional estimates for 2016Q1 and 2016Q2 based on subset of countries with information available in both quarters (around 80% of global GDP in PPP terms).
World GDP growth (Q/Q annualised %)
3
Global industrial production and
consumption are soft
Source: Thomson Reuters; OECD, Main Economic Indicators database; and OECD calculations.
4
Weak investment and sharp inventory
correction are slowing US growth
0
0.5
1
1.5
2
2.5
3
3.5
4
GDP
Personalconsumption
-2
-1.5
-1
-0.5
0
0.5
1
1.5
2
2.5
3
Exports Investment Inventories
GDP and Consumption Growth (Y/Y%) Contributions to Growth (Q/Q annualised)
Sources: Bureau of Economic Analysis; OECD calculations
5
Rebalancing continues in China at a gradual
pace
0
2
4
6
8
10
12
14
2009 2010 2011 2012 2013 2014 2015
Consumption Investment
China: Contributions to GDP Growth (Y/Y %)
Source: Thomson Reuters
6
China: Recent stimulus targeted at
infrastructure spending may be fading
0
5
10
15
20
25
May-15 Aug-15 Nov-15 Feb-16 May-16
Infrastructure Other Real Estate
10
11
12
13
14
15
16
17
18
May-15 Aug-15 Nov-15 Feb-16 May-16
Nominal Fixed Investment (YoY%, cmlv) Credit Growth (YoY%)
Source: Thomson Reuters
7
Global growth is expected to remain
subdued
Source: OECD June 2016 Economic Outlook (EO99) database.
World GDP growth Per cent
-3
-2
-1
0
1
2
3
4
5
6
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
non-OECD OECD World
8
Moderate improvement projected
across most countries
2014 2015 2016 2017
World1 3.3 3.0 3.0 3.3
United States 2.4 2.4 1.8 2.2
Euro area 1.0 1.6 1.6 1.7
Japan 0.0 0.6 0.7 0.4
China 7.3 6.9 6.5 6.2
India2 7.2 7.4 7.2 7.8
Brazil 0.1 -3.9 -4.3 -1.7
1. Moving nominal GDP weights using purchasing power parities. 2. Fiscal years starting in April. Source: OECD June 2016 Economic Outlook database.
Real GDP Growth
9
External forecasts have been revised
downwards since EO99
2016 2017
USA -0.3 0
Japan 0 0.3
UK -0.3 -1.6
Euro Zone -0.1 -0.4
China 0.1 0
Brazil 0.5 0.3
Russia 0.4 0.2
World -0.09 -0.13
Forecast revisions between May 2016 and August 2016
Source: Consensus Economics; OECD calculations
10
Short-term impact of the BREXIT
referendum
85
90
95
100
105£ Effective Exchange Rate Composite PMI
• Heightened uncertainty
• Still too early to tell
• Bank of England stimulus.
46
50
54
58
62
UK Euro area
050
100150200250300350400
Policy Uncertainty Index (2011=100)
11
EO99 BREXIT simulation to end-2018
-1.6
-1.4
-1.2
-1
-0.8
-0.6
-0.4
-0.2
0
UnitedKingdom
EuropeHigh
EuropeModerate
EuropeLow
BRIICS OtherOECD
Japan UnitedStates
Europe Shock UK shock
% pt difference from baseline
• Series of shocks over time
• Europe negatively impacted
• No policy response assumed
12
Global trade is weak
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
2012Q1 2013Q1 2014Q1 2015Q1 2016Q1
World Merchandise Trade Growth (Y/Y %)
Source: CPB Netherlands Bureau for Economic Analysis
13
Trade is particularly weak in Asia and
commodity producers
Source: EO99
14
Bond Yields have continued to descend into
uncharted territory, particularly in Europe and
Japan
Share of Outstanding Sovereign bonds with negative yields
0 20 40 60 80 100
Switzerland
Germany
Sweden
Finland
Denmark
Netherlands
Japan
Austria
France
Sources: Thomson Reuters; Bloomberg; OECD calculations
15
The pace of structural reforms has
decelerated
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.00
0.10
0.20
0.30
0.40
0.50
0.60
Advanced economies Emerging market economies
2011-12
2013-14
2015 (fully implemented)2015 (full implementation of in-process measures)
The share of implemented Going for Growth recommendations
Source: OECD Going for Growth Interim Report 2016
16