By Guido Franco, Mauricio Hitschfeld, Álvaro Pina and Damien Puy The large decline in economic activity triggered by the COVID-19 pandemic posed significant risks to the corporate sector. In the wake of the crisis, two major concerns that emerged were i) the potentially-higher vulnerability of smaller or younger firms,  which could make them bear the brunt of the severe recession, with the likelihood of lasting economic damage; and ii) the risk of a debt overhang effect, whereby firms, even if rescued, would accumulate more debt, negatively impacting their post-pandemic investment and gro ..read more

By Clare Lombardelli, OECD Chief Economist[i] and Max Glanville Fiscal policy faces a challenging outlook in most advanced economies. Using OECD long term analysis and cross country experience of fiscal consolidation I discuss the difficult choices lying ahead. The starting point: A legacy of high public debt After three major crises where fiscal support was used to support economies, public debt ratios stand at historically high levels in most advanced economies. In 2007, before the Global Financial Crisis, COVID-19 pandemic, and energy crises, debt levels were substantially lower than today ..read more

By Zuzana Smidova The Estonian economy has been hit hard in recent years, contracting since the onset of Russia’s war of aggression against Ukraine in February 2022. At the end of last year, output was 6% below the level seen at the end of 2021. Although trade with Russia and Belarus represented only 10% of imports and 4% of exports in 2022, inputs from the eastern neighbours played an important role in Estonian exports, notably in wood, manufacturing and fuel re-exports. Following the surge in energy prices, Estonia’s inflation peaked at 25% in August 2022, hitting household consumption. On t ..read more

Por Jens Arnold, Aida Caldera, Priscilla Fialho, Paula Garda, Alberto González Pandiella, Michael Koelle, Alessandro Maravalle, Tomas Opazo, Claudia Ramírez, Adolfo Rodriguez-Vargas y Elena Vidal, Departamento de Economía, OCDE. El panorama global ha comenzado a mejorar, aunque el crecimiento sigue siendo modesto según las Perspectivas Económicas de la OCDE (OECD, 2024). Por su parte, en América Latina, el crecimiento económico presenta heterogeneidad. En la mayoría de las economías el crecimiento ha perdido dinamismo debido a condiciones financieras restrictivas, una demanda externa débil y a ..read more

By Clare Lombardelli, OECD Chief Economist Available in French Cautious optimism has begun to take hold in the global economy, despite modest growth and the persistent shadow of geopolitical risks. Inflation is easing faster than expected, labour markets remain strong with unemployment at or near record lows.  Private-sector confidence is improving.  Yet the impacts of tighter monetary conditions are being felt, especially in housing and credit markets. This recovery is unfolding differently across regions. The United States and a number of large emerging markets continue to exhibit ..read more

Clare Lombardelli, Cheffe économiste de l’OCDE Un optimisme prudent a commencé à gagner l’économie mondiale, malgré une croissance modeste et l’ombre persistante des risques géopolitiques. Le recul de l’inflation est plus rapide que prévu, et les marchés du travail restent vigoureux, avec un taux de chômage à son plus bas niveau ou proche de l’être. Dans le secteur privé, la confiance s’améliore. Pour autant, les effets du durcissement des politiques monétaires sont perceptibles, notamment sur les marchés du logement et du crédit. Cette reprise qui s’amorce diffère dans ses modalités selon les ..read more

By Enes Sunel and Robert Grundke Investment in Latvia has slowed since the global financial crisis, in contrast to its Baltic neighbours, Estonia and Lithuania. This has weighed on potential growth and slowed the convergence of living standards towards the OECD average. High risk aversion of banks, weak competition in the financial sector, and shallow capital markets have limited access to finance for firms. At the same time, investment demand has been low as high informality, weak competition and skilled labour shortages have weighed on business dynamism, innovation and productivity. How can ..read more

By Francesco Filippucci, Peter Gal, Cecilia Jona-Lasinio, Alvaro Leandro, Giuseppe Nicoletti Recent OECD work discusses the impact of Artificial Intelligence (AI) on productivity, distribution, and growth, highlighting the challenges and conditions to be met before its benefits can be realised (Filippucci et al., 2024). These issues are particularly timely considering weak productivity growth across OECD economies in recent decades (Andre and Gal, 2024) and the widespread enthusiasm and active debate surrounding the growth-potential of AI. Some proponents suggest it might reverse the long-stan ..read more

By Federica De Pace As in many OECD countries, housing affordability deteriorated in Slovakia before the energy crisis. Between 2015 and 2022, house prices rose at a much faster pace than households’ income (Figure 1). Since 2022, the cost-of-living crisis has been squeezing real incomes, dampening housing demand and resulting in declining house prices. However, with interest rates and mortgage costs surging, housing affordability remains a challenge today. Moreover, Slovak households have been particularly exposed to the surge in energy prices, as nearly 10% of their budget accounts for elect ..read more

By Erik Frohm The COVID-19 pandemic and escalating conflicts, such as Russia’s war of aggression against Ukraine, have sent shockwaves through energy markets and global value chains. This has reinforced the imperative to foster economic resilience in many countries, while raising calls for self-reliance, more active industrial policies to benefit domestic industries and trade restrictions (Figure 1). For Switzerland, a country deeply embedded in global markets, navigating these challenges is vital. Central to Switzerland’s success has been its steadfast commitment to openness, enabling the flo ..read more