Canada OECD Info

October 2014

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Message from the Ambassador - Ambassador Judith LaRocque

Ambassador Judith LaRocque

The coming months will represent an opportunity to reflect on emerging global issues and the future of the organization, especially at a Global Strategy Group meeting to be held on 25 and 26 November and which will be attended by senior representatives of our capitals.

At a time when Member countries and OECD Key Partners are working to restore the long-term growth potential of their economies, they face megatrends that are redefining the expectations of individuals and companies, and changing the global economy in an unexpected and potentially destabilizing way.

The OECD continues to advocate trade-related policy reform as a potentially significant contributor to economic growth and jobs. Work is being undertaken jointly by the OECD and the IMF to assess the growth impact of trade-related structural reforms. This analysis draws on the new OECD Services Trade Restrictiveness Index (STRI) (which allows countries to benchmark their policy performance) and the OECD-WTO-World Bank database on global value chains (GVCs), which measures trade in value-added terms.

Moreover, following the first seven deliverables of the G20/OECD Base Erosion and Profit Shifting (BEPS) Action Plan that have been developed by CFA experts in just the 12 months following the launch of the project, CFA experts will continue their work in the coming year to complete a second set of eight more BEPS deliverables and to ensure the coherence of the overall project for final delivery at the end of 2015. This is a significant and unprecedented achievement that targets a number of important aspects of current international tax rules that have facilitated tax avoidance. This challenging initiative also reflects well on the OECDs’ capacity to work effectively with the G20 and other non-OECD countries.

Finally, the global dimension of the OECD's work will remain at the heart of discussions. Given that the OECD has become an important partner of the G7 and G20 and continues to expand its cooperation with emerging countries, it is necessary to consider the balance to be struck between the objectives of global influence and the priorities of Member countries. The modalities concerning OECD’s engagement with Russia will continue to raise important questions.

Revision of the OECD Economic Forecasts

With “la rentrée”, the OECD revised its economic forecasts for G7 and major emerging market countries, updating projections released in the May edition of the Economic Outlook.

Table 1: Revision of the OECD Economic Forecasts
 201320142015
ActualMay 2014
Economic Outlook
September
Interim
Forecasts
differenceMay 2015
Economic Outlook
September
Interim
Forecasts
difference
United States2.22.62.1-0.53.53.1-0.4
Euro Area-0.41.20.8-0.41.71.1-0.6
Japan1.61.20.9-0.31.31.1-0.2
Germany0.21.91.5-0.42.11.5-0.6
France0.40.90.4-0.51.51.0-0.5
Italy-1.80.5-0.4-0.91.10.1-1.0
United Kingdom1.83.23.1-0.12.72.8+0.1
Canada2.02.52.3-0.22.72.70.0
China7.77.47.40.07.37.30.0
India4.74.95.7+0.85.95.90.0
Brazil2.31.80.3-1.52.21.4-0.8

While noting that the global recovery continues at a moderate pace, the OECD revised down most of its projections for 2014 and 2015, with bigger declines for the euro area and Brazil. For Canada, in spite of a small markdown for 2014 growth, the OECD expects Canada to remain among the strongest growing economies in the G7 over this year and next, together with the U.S. and U.K. Among major euro area economies, Germany is expected to continue to do significantly better than France and Italy especially, which is set to experience another year of negative growth.

The modest recovery is also subject to significant negative risks. These include more importantly the possibility that entrenched low inflation in the euro area feeds further negative growth surprises, that geopolitical tensions in Ukraine and the Middle East intensify and weaken confidence, and that the normalization of monetary policy in the U.S. leads to sharper than expected shifts in international financial flows, which could be especially disruptive to some emerging market economies.

Reflecting the fact that the global economy continues to grow at a rate that is well below its pre-crisis pace, world trade also remains sluggish. The OECD suggests that subdued growth in trade-intensive investment is one of the main factors behind this trend.

Global trade in goods and services Volume, year-on-year percentage change
Global trade in goods and services Volume, year-on-year percentage change.

On the policy front, the OECD notes that with increasingly divergent cyclical positions, the necessary macro policy settings of major countries are diverging. While the U.S. and U.K. should continue to move toward ending their unconventional monetary easing, Japan should maintain his quantitative easing program in order to ascertain its break from deflation. Regarding the euro area, the OECD welcomes recent actions by the ECB but recommends more monetary support, including quantitative easing. It also argues that European countries should use the full degree of flexibility available within EU fiscal rules to provide much needed support to demand. The OECD also reiterates that more ambitious structural reforms by all will be required to address the various scars from the crisis, raise potential growth and correct certain ongoing pre-crisis imbalances.

Education at a Glance 2014

Education at a Glance was launched on September 9th. This annual publication contains an impressive number of indicators on who participates, how much is spent, and how education systems operate, and illustrates a wide range of educational outcomes. The 2014 edition is particularly thorough as it also includes data from the last Programme for International Student Assessment (PISA), the Programme for the International Assessment of Adult Competencies (PIAAC), as well as the OECD Teaching and Learning International Survey (TALIS).

The publication shows that despite the economic crisis, access to education and competency levels have increased significantly in recent years in OECD countries. However, data also show that educational attainment and skills do not always align. In addition, socio-economic divisions are increasing between adults with a higher education diploma and the rest of society. High levels of education and competencies pay off more than ever before – in employment and earnings, and in many social outcomes such as health. Worryingly, the report reveals that educational mobility has started to slow down in many countries and that the share of people with lower qualifications than their parents is increasing.

Canadians are still among the most educated within the OECD. More than 57% of adults aged 25-64 have a tertiary degree (university or college) in Canada, Korea and Japan, compared with an OECD average of 40%. As in other OECD countries, there is a correlation between education and employment and income levels: 82 % of Canadian adults with a tertiary degree have a job, compared with 56% of adults who have no high school degree. Canadian universities continue to attract an important number of foreign students – Canada is the 6th most popular destination for international students. Canadian students at age 15 are still well above the OECD average in the three competencies evaluated by the PISA Survey (numeracy, literacy and science) but their performance has weakened in mathematics and science.

For more information, read the note on Canada.

OECD High-Level Policy Forum on Migration

Canada’s Minister of Citizenship and Immigration

Canada’s Minister of Citizenship and Immigration, the Honourable Chris Alexander, will chair the OECD High-Level Policy Forum on Migration in Paris on December 1-2, 2014. Under the theme Mobilizing Migrants’ Skills for Economic Success, the meeting will offer Ministers an opportunity to discuss policy challenges related to migration and migrants’ economic and social integration. The Forum will include sessions on reconciling short- and long-term objectives in migration policies, building public confidence on migration issues, engaging with employers and unions, and fostering the role of migration and migrants in skills strategies. The 2014 edition of the OECD’s International Migration Outlook will also be launched at the Forum.

More information on the OECD’s work on international migration can be found here.

Innovating the Public Sector: from Ideas to Impact

The Honourable Tony Clement, President of the Treasury Board of Canada, will visit the OECD in November to participate in a conference entitled Innovating the Public Sector: from Ideas to Impact. Minister Clement will address the conference, including at the opening plenary and the closing Ministerial panel; he will also hold bilateral meetings with his counterparts on the margins of the meeting, scheduled for November 12-13, 2014. The conference will bring together public sector practitioners, researchers, civil society and businesses to discuss how innovation can help solve today's complex challenges. This gathering will also introduce to a broad audience the OECD Observatory of Public Sector Innovation (OPSI), an online interactive platform that collects and analyses examples and shared experiences of public sector innovation to provide practical advice to countries on how to make innovations work. Canada has strongly supported this initiative, and currently co-chairs the Observatory’s Task Force.

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