Transcript Promoting Work and Well Being: an OECD Development Centre Economic Outlook

Promoting work and well being:
an OECD Development Centre
Economic Outlook
23 June 2008
Bucharest
Javier Santiso
Director & Chief Development Economist,
OECD Development Centre
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DEV
A platform for OECD & developing country dialogue
OECD members
Non-OECD members
2008 - 23 members
Chile
Israel
South
Africa
Brazil
India
Thailand
Romania
Vietnam
Egypt
2
BSEC-CA
An OECD Development Centre Economic Outlook
The OECD BSEC-CA Economic Outlook
• A cross-country comparative analysis of
macroeconomic and policy developments of the
BSEC-CA region, involving 12 BSEC and 5 CA countries
• The first such report dedicated to a cross-cutting
policy issue: Work and Well-Being
Further OECD work on Romania:
• Reform Effort Support – Sigma – 2001-2008
• Education Policies for Students at Risk and those with
Disabilities in South Eastern Europe- EDU - 2006
• Investment Policy Review for Romania – DAF – 2005
• Enterprise Policy Performance Assessment Romania – DAF - 2005
• Reviews of National Policies for Education Romania - EDU - 2003
• Romania -- Economic Assessment – ECO - 2002
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Growth
Strong & sustained overall growth
Growth in BSEC-CA Countries
GDP growth (per cent)
14
1998 - 2008
12
10
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GROWTH:
• Over 2001-06, average growth rate
for the 11 CIS countries was
around 8 per cent, comparing
favourably with Asian economies.
• Substantial improvements in
productivity have been the driving
force behind this strong growth.
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4
2
0
-2
LOW & LOWER-MIDDLE INCOME BSEC: Albania, Armenia, Azerbaijan,
Georgia, Moldova, Ukraine
UPPER-MIDDLE & HIGH INCOME BSEC: Bulgaria, Greece, Romania,
Russia, Serbia, Turkey
CENTRAL ASIA: Kazakhstan, Kyrgyz Republic, Tajikistan, Turkmenistan,
Uzbekistan
TRADE:
• The European Union is the main
trade partner for the region,
accounting for over half of all trade
for the six non-CIS countries.
• Russia is the main intra-regional
trading partner,
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Low & Lower-middle income countries
L-LM
Azerbaijan
• Inflationary pressures are increasing in a number of
Low- and Lower-middle-income BSEC countries. The
main drivers are high import prices, particularly
energy, and increasing consumer demand boosted by
remittances.
Armenia
• Growth is projected to slow somewhat from 10.6 per
cent to 9.2 per cent in 2008.
GDP Growth
2006-2007
Ukraine
Key macroeconomic variables, 1995-2007
Georgia
GDP (current prices,
USD billion)
1995
2007e
Albania
2007e
2006
Moldova
0
5
10
15
20
25
30
GDP Growth (%)
Source: OECD Development Centre / IMF
35
GDP per capita, PPP
(USD)
1995
2007e
Population
(million)
2007
Albania
Armenia
2.7
1.3
10.8
7.8
2 636
1 418
6 197
5 769
3.2
3.5
Azerbaijan
Georgia
Moldova
Ukraine
2.4
1.9
1.4
37
31.1
9.6
4
131.2
1 764
1 287
1 650
3 999
8 521
4 176
3 090
8 624
8.6
4.4
3.4
46.4
Note: e data for 2007 are estimates.
Source: IMF, 2008
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Upper Middle & High-income countries
UM-H
• Widening current account deficits across these
countries underline an increasing exposure to
international shocks.
GDP Growth
2006-2007
Russia
• Strong currency appreciation and import growth
led to larger trade deficits. Import prices,
particularly tied to energy and import demand, are
also rising.
Romania
Serbia
Key Macroeconomic Variables, 1995-2007
Bulgaria
Turkey
2007e
Greece
2006
0
2
4
6
8
GDP Growth (%)
Source: OECD Development Centre / IMF
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GDP (current prices, GDP per capita, Population
USD billion)
PPP (USD)
(million)
1995
2007e
1995
2007e
2007e
Bulgaria
13.1
39
5 494 10 973
7.6
Greece
148
356 1 4156 35 167
11.1
Romania
35.5
159
5 717 11 079
21.6
Russia
313.5
1 224
5 947 13 432
142.1
Serbia
..
41
.. 7 265
7.5
Turkey
166.4
482
5 494 9 816
73.6
Note: e denotes data for 2007 are estimates.
Source: IMF, 2008
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Central Asia Boom times for oil exporters
• Regional growth slowed slightly in 2007 to 8.6 per
cent, with 7.7 per cent forecast for 2008, mainly
because of decelerating Kazakh growth.
GDP Growth
2006-2007
• Inflation is on the rise, mainly due to high energy
prices, booming domestic demand and rapid
accumulation of forex reserves.
Uzbekistan
Kazakhstan
Key macroeconomic variables, 1995-2007
Tajikistan
Kyrgyz Rep.
2007
2006
Turkmenistan
0
2
4
6
8
10
GDP Growth (%)
Source: OECD Development Centre / IMF
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GDP
GDP per capita, PPP Populatio
(current prices,
(USD)
n (million)
USD billion)
1995 2007
1995
2007
2007
Kazakhstan
16.6 95.5
3556
10658
15.1
Kyrgyz Rep.
1.5
3.5
1171
2315
5.3
Tajikistan
0.6
3.4
668
1637
6.4
Turkmenistan 5.9
26.2
3098
9483
5.2
Uzbekistan
10.2 20.2
1277
2541
26.8
Source: IMF, 2008
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Investment Growing fast, yet still oil-focused
FDI flows to BSECAO region
USD Billion
35
30
25
20
Bulgaria
Romania
Russian Federation
Turkey
Kazakhstan
BSEC (RHS)
Central Asia (RHS)
15
100
90
80
70
60
50
40
30
10
20
5
10
0
0
2000 2001 2002 2003 2004 2005 2006
• FDI in the countries of the south Caucasus
and Central Asia has been driven by the
availability of oil and gas.
• Privatizations in South East Europe have
boosted FDI figures in those countries.
• Efficiency-seeking and market- seeking
FDI (mainly in telecommunication and
banking) has been important in non-oil
producing countries.
• The entry of Romania and Bulgaria into EU
have been strong drivers of investment for
those countries.
• Outward FDI from the region has also
increased, thanks to dynamic MNCs mainly
from Russia (78% of total).
Source: OECD Development Centre / UNCTAD WIR
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Increasing access to funding
External financing
Central Asia
14
280
12
230
10
180
8
130
6
80
4
30
2
-20
0
USD Billion
330
External financing/ GDP (%)
USD Billion
External Financing
BSEC
40
35
35
30
30
25
25
20
20
15
15
10
10
5
5
0
0
External financing/GDP (right-hand axis)
External financing/GDP (right-hand axis)
External financing
External financing
Capital inflows
External financing / GDP (%)
Pub. finance
FDI Inflows
FDI Inflows
Capital inlfows Greece, Russia and Turkey
Capital inflows
Workers' remittances and compensation of employees
ODA
Capital flows/GDP
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Source: OECD Development Centre / IMF
Social indic. A heavy social cost: death rates in BSEC-CA countries
Annual deaths per 100,000
2,000
1,800
Males
Females
Both sexes
1,600
1,400
1,200
1,000
800
600
400
200
0
Source: OECD Development Centre / IMF
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Specialisation in BSEC-CA countries
Exports
Export specialisation (Balassa) Index
average 2001-06
SITC group
Albania
Armenia
Azerbaijan
Bulgaria
Georgia
Greece
Kazakhstan
Kyrgyz Rep.
Moldova
Romania
Russia
Serbia
Tajikistan*
Turkey
Turkmenistan*
Ukraine
Uzbekistan*
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2
crude
beverages &
materials (ex.
tobacco
fuel)
1.9
3.4
10.7
3.5
0.8
0.9
2.5
1.9
18.8
7.4
4.6
1.8
0.2
2.1
3.5
3.6
33.3
2.8
0.2
1.8
0.2
1.4
1.5
1.5
0.2
7.6
1.1
0.5
3
mineral
fuels
4
6
animal &
manufactured
vegetable oils
goods
0.3
0.3
8.8
0.9
0.4
1
6.9
1.4
0.1
0.9
5.3
0.3
0.1
0.2
0.1
0.3
2.3
0.7
0.1
6.4
0.1
0
8.7
0.6
0.2
2.3
0
1.2
1
3.9
0.2
1.8
0.8
1.5
1.4
0.7
0.6
1.4
1.1
2.6
4.4
1.8
0
0.9
9.3
1.2
2.4
1
0.6
10
1.5
Source: OECD Development Centre / Comtrade, 2008
0
5.2
0.2
0.2
3.1
1.4
• No BSEC-CA countries have
any form of specialisation in
exports of food and animals
(SITC 0), chemical products
(SITC 5) or machinery and
transport products (SITC 7)
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Focus
Romania in perspective
Romania
• Romania was the second largest FDI recipient in both South Europe and the CIS. This is essentially the result
of privatization.
• Very low labour costs coupled with proximity to the EU market contribute to the strong attraction of
Romania for FDI. Nevertheless, higher value-added sectors are also attracting strong investment.
• Romania needs to comply with E.C rules and regulations on judicial independence, and structural
transparency and accountability reforms
BSEC-CA
• 2006 saw a dramatic surge in FDI to the BSEC-CA reegion, raching USD 90 billion
• Inflows rose in almost all countries, driven by several factors. FDI to UMH-BSEC countries more than doubled
in 2006 when it reached USD 76 billion.
• Inflows rose in almost all countries, driven by several factors. FDI to UMH-BSEC countries more than doubled
in 2006 when it reached USD 76 billion.
• The principle drivers were the forthcoming accession of Bulgaria and Romania to the European Union, the
continuation of the privatization process and new opportunities in extractive industries, especially in Russia.
• Greece and Turkey recorded their highest-ever FDI inflows, owing to large takeover deals in the financial
sector and telecommunication sector (OECD, 2007a).
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Outlook
Looming inflation risks on the horizon
• The entire BSEC-CA region faces slower growth as a result of the U.S. and
Western European downturn.
• Inflationary pressures are increasing with high import prices, particularly
energy, and increasing consumer demand boosted by remittances.
• The poor are particularly vulnerable people to the effects of higher food
and energy prices.
• BSEC-CA economies will continue to prosper, but challenges are rising
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Promoting work and well being:
an OECD Development Centre
Economic Outlook
23 June 2008
Bucharest
Javier Santiso
Director & Chief Development Economist,
OECD Development Centre
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