For years, the big-picture, long-term story in the global economy has been that of convergence. The dates and metrics vary but not the broad forecast: if current trends hold, then, around the middle of this century, per capita incomes in emerging economies will ‘converge’ with those in the rich world. The result: A ‘middle class’ world and vast fortunes for all those clever enough to position themselves to take advantage. But the OECD is out today with two bits of research/futurology that make clear the picture is a lot more complicated than that. And convergence may not happen as fast as many expect. The message of the first (the hefty annual “Perspectives on Development”) is that, bar China, the “BRIICS” (the Brics plus Indonesia) are likely to fall well short of seeing their per capita incomes reach the average of OECD countries by 2050. Read more
By Winnie Byanyima of Oxfam International
After the world was plunged into a financial crisis, back in 2009, G20 leaders promised to clean up the international tax system, once and for all. The result – five years on – is a plan of action devised for them by the Organisation for Economic Co-operation and Development to tackle Base Erosion and Profit Shifting (BEPS), a series of tactics used by multinational companies to make profits ‘disappear’ or move to another country, to pay less or even avoid paying corporate taxation. Read more
It turns out the OECD’s May forecasts (made days after hints of tapering) were off… by quite a lot.
On Tuesday, the body knocked 2.3 percentage points off its forecasts for India’s GDP growth in 2013, for example, and 1.7 points off its growth in 2014. Read more
The OECD has one key piece of advice for Brazil’s government when it comes to monetary policy: let the central bank do its job.
While praising Brazil for reducing poverty and inequality, the OECD said in its report on Tuesday that the country must build confidence in its macroeconomic policies by tightening monetary policy and improving the credibility of the central bank. Read more
The OECD Economic Outlook, published on Tuesday, has rung a few alarm bells for developed economies, as the FT reports.
But what about emerging economies? What’s the impact on them from the eurozone “negative feedback loop”, as the organisation puts it? Read more
On the face of it South Korea’s unemployment levels should be the envy of the world, with figures published on Tuesday showing the jobless rate falling last month to just 3.1 per cent. Compare that to an average of 8 per cent in the OECD, the rich economies’ club, and 24 per cent in crisis-torn Spain, a country with a similar population and income per head on a spending power basis.
But in fact Korea’s workers and job seekers face much bigger difficulties than these numbers suggest. It would be a brave unemployed Spaniard who swapped places with a Korean. Read more
Just as China looks to be refuelling the investment engine, a word of warning comes from the World Bank: China’s traditional fallback plan of infrastructure-based growth is not the answer to a sliding economy. Much better to get people spending.
The World Bank also trimmed its 2012 growth forecast for China to 8.2 per cent, in line with yesterday’s update from the OECD. Read more
A bit of a vindication for Poland’s Jacek Rostowski from the OECD on Wednesday. The rich nations club is one of the first international institutions to back the finance minister’s plan to drive the budget deficit to 2.9 per cent of GDP this year.
Rostowski’s numbers had been called into question by analysts and even by the European Commission, which felt that the fiscal squeeze aimed at bringing the deficit down from 7.9 per cent in 2010 was too ambitious. Read more
The OECD published a 150-page report on Hungary on Tuesday, part wish-list, part gripe. The country must take “swift action” to stabilise its economy and put growth on a sound footing.
This on the same day that the EU suspended some of Hungary’s infrastructure subsidies unless the deficit isn’t cut by June 22. But will the Orbán government take heed? Read more