Page 50

OUTLOOK

Netherlands

Norway

Steady growth

Growth to strengthen gradually

GDP growth is projected to remain broad-based and steady at around 2%. Private consumption will benefit from improving labour market conditions. The housing market will strengthen further on the back of low interest rates. Wages are set to accelerate as unemployment continues to decline, while inflation will increase gradually from its low level. The current account surplus is expected to remain high despite firm domestic demand and lower gas exports.

Economic growth will strengthen gradually until 2018 supported by higher private consumption and a rebound in non-oil investment, helped by better global prospects and a weaker currency. The pace of decline in petroleum investment is set to slow. The unemployment rate should peak in 2016, whereas inflation will edge down as the impact of the exchange rate depreciation abates and economic slack continues.

Very accommodative euro area monetary policy is supporting demand. The fiscal policy stance is projected to be broadly neutral. Continuing to improve skills, particularly of immigrants and the long-term unemployed, and better matching skills to jobs, would raise productivity and potential GDP growth while also helping to make growth more inclusive.

GDP growth

GDP growth 2013

2016

Current prices EUR billion

652.8

2017

2018

% real change

2.0

2.0

1.9

2013

2016

Current prices NOK billion

3 071.1

2017

2018

% real change

0.7

0.5

1.4

New Zealand

Poland

Growth to moderate

Investment to accelerate

Recent strong economic growth is projected to moderate to less than 3% in 2018. Both net migration and expenditure on the Canterbury earthquake rebuild are expected to slow gradually, slowing domestic demand, especially construction activity. The latest earthquake will entail rebuilding investment, but this is not included in the projection because it is too early to judge the economic effects. Growth will continue to be driven by tourism, with dairy price increases providing a further boost to incomes through the terms of trade. Inflation is likely to rise but remain below the mid-point of the official 1-3% target range.

GDP growth is projected to strengthen to around 3% annually in 2017-18, thanks to higher social transfers, low interest rates and rising disbursements of EU funds. Increasing disposable income and consumption, the switchover to the new budgetary period for EU funds and diminishing spare capacity should lead to an acceleration in investment. Stronger aggregate demand is expected to underpin a return to modest inflation.

The Reserve Bank has tightened loan-to-value restrictions in order to limit financial stability risks from the high levels of household debt associated with rapid house price increases. These increases have been fuelled by low interest rates, as the Bank has attempted to lift persistently below-target inflation. The fiscal stance is currently neutral to mildly contractionary.

GDP growth 2013 226.7

The central bank is projected to start increasing rates towards the end of 2017, as inflation picks up. New social spending was mostly financed by one-off revenues in 2016. Plans to increase tax compliance are welcome, and scaling down exemptions and special rates would improve efficiency, but lowering the retirement age would decrease potential growth and public revenues, which are already likely to be curbed by population ageing.

GDP growth 2016

Current prices NZD billion

48

Monetary policy has been very accommodative and fiscal policy expansionary, which has supported activity. However, sustained low interest rates have fuelled a protracted housing boom. Additional fiscal stimulus, rather than a further easing of monetary policy, should be used to support activity as long as slack remains in the economy. Reforms to improve the business environment, to strengthen competition and to enhance skills and education outcomes are key for raising growth potential and maintaining inclusiveness.

2017

2018

% real change

3.5

3.4

2013

2016

Current prices PLN billion

2.6

1 656.8

2017

2018

% real change

2.6

3.2

3.1

OECD Observer No 308 Q4 2016  
Read more
Read more
Similar to
Popular now
Just for you