9 November 2015

Press Conference

Angel Gurría Secretary-General

and

Álvaro Pereira Director, Country Studies, Economics Department

For a video link to the press conference and related material:

www.oecd.org/OECDEconomicOutlook

Economic Outlook No. 98

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2014 2015 2016 2017

World2 3.3 2.9 3.3 3.6

United States 2.4 2.4 2.5 2.4

Euro area 0.9 1.5 1.8 1.9

Germany 1.6 1.5 1.8 2.0

France 0.2 1.1 1.3 1.6

Italy -0.4 0.8 1.4 1.4

Spain 1.4 3.2 2.7 2.5

Japan -0.1 0.6 1.0 0.5

United Kingdom 2.9 2.4 2.4 2.3

Mexico 2.1 2.3 3.1 3.3

Korea 3.3 2.7 3.1 3.6

Canada 2.4 1.2 2.0 2.3

Turkey 2.9 3.1 3.4 4.1

Australia 2.7 2.2 2.6 3.0

China 7.3 6.8 6.5 6.2

India3 7.3 7.2 7.3 7.4

Russia 0.6 -4.0 -0.4 1.7

Brazil 0.2 -3.1 -1.2 1.8

Indonesia 5.0 4.7 5.2 5.5

South Africa 1.5 1.5 1.5 2.0

OECD2 1.9 2.0 2.2 2.3

Non-OECD2 4.7 3.7 4.2 4.6

World real trade growth 3.4 2.0 3.6 4.8

1. Year-on-year increase.

2. Moving nominal GDP weights us ing purchas ing power pari ties .

3. Fisca l years s tarting in Apri l .

Real GDP growth1 (%)

OECD Economic Outlook - November 2015

Summary of OECD projections for G20 countries

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Key Issues

Harbinger of further slowing of global GDP growth?

China’s role at centre via commodity prices and global value chains

Advanced economies resilient so far

Real investment continues to disappoint

Financial exposures in emerging markets could create stress

Resume momentum for structural reforms, especially financial sector and network services in Europe

Take advantage of low interest rates to increase public infrastructure investment, including to tackle climate change

Global trade weakness

Investment disconnect

Policy reconfiguration to support demand

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Global GDP growth: modest projected upturn (given smooth slowdown in China and more robust investment in advanced economies)

Global GDP

Real GDP

Annual percentage changes

1. Moving nominal GDP weights using purchasing power parities. 2. Fiscal years starting in April.

Source: OECD November 2015 Economic Outlook database.

Dramatic slowdown in global trade growth Such slow rates historically occur with recessions

Import Volumes

Import Volumes

Source: OECD November 2015 Economic Outlook database.

2014 2015 2016 2017

World1 3.3 2.9 3.3 3.6

United States 2.4 2.4 2.5 2.4

Euro area 0.9 1.5 1.8 1.9

Japan -0.1 0.6 1.0 0.5

China 7.3 6.8 6.5 6.2

India2 7.3 7.2 7.3 7.4

Brazil 0.2 -3.1 -1.2 1.8

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Weaker import growth in China is a key element of the broader trade

slowdown Chinese import growth has slowed sharply This has exerted downward pressure on

commodity prices

Note: 2015 is change in the first three quarters vs 2014.

Import volumes are deflated based on OECD estimates.

Nominal imports during the first three quarters of 2015 were

down 8 per cent.

Sources: OECD November 2015 Economic Outlook database.

Note: Commodities shown are aluminium, coal, copper, iron

ore, lead, natural gas, nickel, oil, uranium and zinc.

Sources: IMF; BP Statistical Review of World Energy;

World Bureau of Metal Statistics.

Rebalancing is happening in China but its pace is uncertain Manufacturing and services growth

GDP forecasts for China and number of forecasters

Sources: Chinese National Bureau of Statistics, Bloomberg.

Services have been growing faster than manufacturing associated with more consumption

But forecasters are unsure about the true underlying pace of GDP growth

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Weaker Chinese import growth helps explain slowdowns among other EMEs Change in GDP growth

Y-o-y growth in Q2 2015 compared to y-o-y growth in Q2 2014

Note: For Korea, 2015 Q3 compared to 2014 Q3. Intensive trade with China is where merchandise exports to China were

above 2% of GDP in 2014.

Sources: OECD National Accounts database; IMF; UNCTAD.

As a group, advanced economies have so far been resilient to EME weakness Revisions to the OECD Economic Outlook projections between June and November 2015

Sources: OECD June and November 2015 Economic Outlook databases.

Sharpest slowdowns in countries with close trade links to China and/or dependent on commodities

GDP projections for OECD economies changed little compared to BRICS

Although OECD export growth has been revised down sharply

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Real investment exhibits sluggishness and mixed projected improvement Real fixed investment

1. OECD commodity exporters include Australia, Canada, Chile, Mexico and Norway.

Source: OECD November 2015 Economic Outlook database.

Financial exposures have increased; market volatility could exacerbate

vulnerabilities Increase in debt levels in EMEs EMEs sovereign bond spreads and US

end-period, per cent of GDP equity price volatility

Note: Credit from banks and non-banks adjusted for breaks. For South

Africa 2008 instead of 2007.

Source: BIS.

Source: Thomson Reuters

Projected improvement assumes favourable structural and demand policy settings

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Tighter labour markets and new policies should yield healthier wage growth,

but haven’t yet Unemployment rate Compensation per employee

Source: OECD November 2015 Economic Outlook database.

Structural policy ambition is key for the outlook, but progress has stalled Changes in the strictness of regulatory barriers to competition

Average OECD indicator of product market regulation, overall index and three main sub-components

Source: OECD calculations.

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Monetary policy support is required to reach inflation targets Core inflation

Note: Consumer prices excluding food and energy. The private consumption deflator is used for the United States. For Japan, excludes the estimated impact of the consumption tax increases in April 2014 and April 2017. Source: OECD November 2015 Economic Outlook database.

Collective action on public investment could support growth without

worsening debt ratios 1st year effects of ½ percent of GDP public investment stimulus by all OECD economies

Change from baseline

Note: Simulation using the NiGEM model, based on a two-year increase in the level of government investment equivalent to ½ per cent of GDP per annum in all OECD countries. The euro area figures are a weighted average of Germany, France and Italy. Source: OECD calculations.

Core inflation is not projected to reach central bank target levels within 2 years in any major advanced economy

Accompanying structural reforms needed so as to improve credit channel (euro area) and to promote reallocation (Japan)

Collective action, quality projects, and structural policy efforts are required to realise these gains

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Tackling climate change is a long-term challenge but must be more ambitious now

Source: IPCC.

Collective action is needed, but advanced economies have lost momentum Global new investment in renewable energy

Note: New investment volume adjusts for re-invested equity. Total values include estimates for undisclosed deals. Developed volumes are based on OECD countries excluding Mexico, Chile and Turkey. Sources: Bloomberg New Energy Finance; UNEP; Frankfurt School for Climate & Sustainable Energy Finance.

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Well-designed climate change policies can improve the short-term outlook

Some costs now but smaller than costs of inaction

Some “costs” can stimulate activity, such as through investment, research, confidence effects

Is not an excuse to delay policy action on climate change

Collective action on investment, including on climate, would support growth

Summary

Cost-benefit analysis should not deter action

With clear and credible policies

Even a weak growth outlook

Despite recent weakness, global trade and GDP are expected to recover in 2016-1017

The projections assume effective policies and collective action reflected in revived investment and wage growth

Structural reform efforts need to be revived to support monetary and fiscal efforts

Infrastructure spending, including for climate change mitigation could help in the short as well as the long-term