GDP Growth, Employment and Labor Income Share

Assessing the Scenario: The Trend of Selected OECD Macroindicators

The Organization for Economic Cooperation and Development (OECD) forecasts do not show a favorable trend for European Gross Domestic Product (GDP) growth. The OECD countries are supposed to grow by 2.5 percent in 2014– 15, while Eurozone growth is forecast to be about 1.4 percent, with Italy and Greece bringing up the rear. Even worse is the forecast employment trend, with a feeble 1 percent growth per year for OECD countries and 0.4 percent for the Eurozone, with Italy in the last group (the only country with negative growth). Thus, the OECD forecast for Europe is marked by a weak recovery without job increases. On the unemployment side, things are not better. As for the OECD countries, the unemployment rate is forecast at 7.4 percent, and the Eurozone rate is forecast to reach 11.5 percent. It is worth showing four further indicators. If we look at inflation as an indicator of the pressure of aggregate demand, we notice that in the Eurozone the PIIGS (Portugal, Ireland, Italy, Greece and Spain) show an average annual inflation rate of under 1 percent in the two-year period 2014– 15, with marked deflation in Greece.