Browse by: "O"

The OECD’s Development Assistance Committee (DAC) conducts peer reviews of individual members once every five to six years. Reviews seek to improve the quality and effectiveness of members’ development co-operation, highlighting good practices and recommending improvements.

Fourteen years after joining the DAC in 2010, Korea is at a pivotal juncture as it rapidly scales up official development assistance (ODA) and assumes more global responsibility. The 2020 revision of the Framework Act signals a more coherent, cross-government approach to implement a larger budget. There is potential to bring greater coherence between domestic and international policies supported by legislation on sustainable development. This peer review provides a set of recommendations for Korea to strengthen strategic partnerships and dialogue with partners, and use the cross-government capacity review and evaluations to prioritise larger ODA volumes to implementers. It recommends that Korea increase the number of qualified staff working in development across government, delegate more authority to partner country offices, and increase its risk appetite to expand private sector operations.

Estonian living standards have doubled since 2000 and income convergence was steady prior to the pandemic, although per capita GDP and productivity remain below the OECD averages. The economy experienced a severe downturn due to disruptions in trade, weaker export demand, high inflation and tight monetary conditions. With improvements in external demand, growth should start to recover this year. Fiscal policy needs to balance stabilisation of the economy with narrowing the budget deficit. Although a part of the deficit reflects cyclical conditions, expenditures have increased in recent years. Alongside the planned spending reviews, Estonia should review the tax system to explore avenues for increasing revenues in the medium term. Further convergence in living standards requires strengthening productivity growth by boosting digitalisation, innovation, and skills across all firms. Due to continued reliance on domestic oil shale and increasing emissions in several sectors, decarbonisation needs to accelerate. Health and life expectancy have improved significantly, but years spent in good health are still among the lowest in the OECD. While the health system is well designed, a special chapter of this report looks at areas for improvement in order to enhance health outcomes.

SPECIAL FEATURE: TOWARDS BETTER AND MORE SUSTAINABLE HEALTHCARE FOR ALL

After a strong recovery from the pandemic, the New Zealand economy has slowed, with higher interest rates weighing on housing construction, and inflation undermining purchasing power and consumption. Monetary policy has tightened significantly since late 2021 and proved efficient at reining in inflation. Better control of government spending is needed to keep fiscal consolidation on track in the short run and restore fiscal space for ageing-related expenditures and the green transition in the long run. New Zealand also faces an investment gap in addressing the needs of a rapidly growing population.

Improving competition policies and streamlining the regulatory environment would help revive productivity growth and lift living standards in the long run. As highlighted by the recent OECD PISA study, achievement in school education has declined markedly. Inequality remains high and attendance has dropped. There is an urgent need to improve the curriculum, reform teacher education and strengthen support to teachers and schools to deliver better education outcomes. Adapting to climate change will require maintaining high insurance coverage for climate-related losses as well as changes to land-use planning and a comprehensive long-run energy strategy. The green transition needs a more rigorous cost-benefit assessment of emission reduction options.

Special features: Competition, School Education, Climate Change

There are signs that the global outlook has begun to brighten. Activity remains more resilient than expected, although with considerable divergence across economies, inflation is falling steadily and unemployment remains low. Global growth is projected to remain unchanged in 2024 and strengthen modestly in 2025, with inflation returning to target in most countries by the end of 2025. Risks around the outlook are becoming better balanced, but substantial uncertainty remains. High geopolitical tensions, particularly in the Middle East, could disrupt energy and financial markets, causing inflation to spike and growth to falter. Elevated debt service burdens could rise further as low-yielding debt is rolled over, exposing financial vulnerabilities. Inflation might prove more persistent than anticipated but could also fade faster if strong labour force growth continues. The key policy priorities are to ensure a durable reduction in inflation, establish a fiscal path that will address rising pressures, and undertake reforms to raise sustainable and inclusive growth in the medium term.

This issue includes an assessment of the global economic situation, and a chapter summarising developments and providing projections for each individual country. Coverage is provided for all OECD members as well as for selected partner economies.

Russia’s war of aggression against Ukraine has led to higher energy prices and disruptions in trade and supply chains, weighing on economic growth. Economic convergence had already slowed down before the pandemic, calling for accelerating structural reforms. Rising spending pressures related to defence, internal security, health and old age poverty need to be addressed by raising spending efficiency and tax revenue, while the tax burden should be shifted from labour towards other income, property, and environmental taxes. Continuing to improve the capacity of the public sector, fostering investment and innovation and addressing skilled labour shortages are key for raising potential growth. Low credit supply is a main factor for weak investment and should be tackled by fostering competition and deepening capital markets. High informality, which hinders access to finance and distorts the level playing field, should be addressed by reducing labour taxes for low-wage earners, improving tax enforcement and continuing to fight corruption. Strengthening the power of the Competition Council to enforce competitive neutrality of state-owned enterprises and challenge regulation that restricts competition would help to foster business dynamism and innovation. Addressing skilled labour shortages will require facilitating skilled migration and investing more in human capital.

SPECIAL FEATURE: RAISING INVESTMENT TO SUPPORT GROWTH

The Slovak Republic has reduced some environmental pressures over the past decade. However, it needs to do more to reduce air pollution, improve waste and wastewater treatment and move towards carbon neutrality. Since 2011, the country has taken important steps to improve its biodiversity policy. Slovakia needs to now align its strategy with the Kunming-Montreal Global Biodiversity Framework and the EU Biodiversity Strategy for 2030. Most species and habitats are in an unfavourable state and biodiversity considerations are not sufficiently integrated into sectoral policies.

This is the third Environmental Performance Review of the Slovak Republic. It provides an evidence-based assessment of the country's progress towards its environmental goals over the past decade. The 29 recommendations aim to help Slovakia improve its environmental performance, giving special focus to biodiversity and forests in the context of climate change.

The Slovak economy has been relatively resilient to the energy crisis, but growth has slowed amid high inflation, weakening foreign demand and tightening financial conditions. The pandemic and the energy crisis have deteriorated public finances; steady fiscal consolidation is now needed to rebuild fiscal buffers and improve long-term fiscal sustainability in the face of rapid population ageing. Sustaining economic convergence and facilitating inclusive structural change requires improving skill provision at all stages of the learning cycle, fostering the domestic innovation capacity and improving the business environment. A more consistent pricing of carbon across the economy and stronger incentives for green investment and innovation would make growth more sustainable. Improving housing affordability requires structural reforms to improve the efficiency of the housing market, property tax reforms, and targeted support to vulnerable households. Incentives for housing renovation must be strengthened to address energy poverty and achieve environmental goals.

SPECIAL FEATURE: ADDRESSING HOUSING MARKET CHALLENGES

Switzerland has proved resilient through the pandemic, geopolitical turmoil and reverberations in energy markets. Unemployment and inflation are low, and living standards are among the highest in the OECD. This is reinforced by a dynamic market-based economy, highly skilled workforce and prudent macroeconomic policies. Yet, slowing growth amid continued price pressures pose challenges. A tight monetary policy is necessary to ensure that inflation remains durably within the central bank’s target range. Although a broadly neutral fiscal stance is warranted in the short term, longer-term fiscal pressures call for structural reform to counter rising cost of ageing and to support the green transition. Stronger incentives and speedier approval processes are needed to effectively reduce greenhouse gas emissions. The labour market is strong and unemployment low. Yet, skills shortages are rising. Longer working lives, improved incentives for mothers to participate more intensively in the labour market and migration of skilled foreign workers can mitigate the shortages. Improving framework conditions and maintaining access to foreign markets, while refraining from trade restrictions and distortive industrial policies, will strengthen economic resilience. Strong domestic competition and a better business environment will further reinforce Switzerland’s position as a global hub for business, investment and research.

SPECIAL FEATURE: STRENGTHENING ECONOMIC RESILIENCE WITHIN GLOBAL VALUE CHAINS

Romania’s economy withstood significant adverse shocks in the wake of Russia’s invasion of Ukraine and the ensuing energy crisis. Tackling high inflation is the immediate task for macroeconomic policy. Fiscal consolidation would complement restrictive monetary policy in keeping demand at sustainable levels. Greater tax revenues are needed to stabilise the public debt burden while funding priority spending – including on critical infrastructure, pensions, health care and the education system. Productivity growth is a powerful engine for lifting living standards but sustaining it will require a sound investment climate backed by strong competition, predictable policymaking, financial inclusion and effective controls against corruption. Romania’s Recovery and Resilience Plan is helping drive reform. More policy focus is needed on addressing disparate socio-economic outcomes within Romania and to lift employment among groups underrepresented in formal work, including women. Faster progress is also required to decarbonise the economy by 2050. Romania needs more renewable power and big energy savings to reduce fossil fuel use. Energy-efficient buildings, better transport systems and consistent price signals for abatement are also needed. Efficient and fair policies can limit costs from the net-zero transition, shield affected communities from hardship, and prepare people for changing climates.

SPECIAL FEATURE : DECARBONISING ROMANIA'S ECONOMY

Chile has made important strides on its environmental agenda in recent years with the passage of the Framework Law on Climate Change, the establishment of the Biodiversity and Protected Areas Service and the ratification of the Escazú Agreement. However, the country has made limited progress in decoupling environmental pressures from economic growth. Greenhouse gas emissions have continued to rise and the country is not on track to reach its legally binding target of net zero by 2050. Chile is well-positioned to achieve its targets for biodiversity, while air pollution remains a serious public health challenge and waste management relies heavily on landfilling. Chile is facing a severe and deepening water crisis that requires concerted action to improve water allocation and water quality, and to strengthen water governance. The review provides 36 recommendations to help Chile improve its environmental performance, with a special focus on water management and policies.

This is the third Environmental Performance Review of Chile. It provides an independent, evidence-based evaluation of the country’s environmental performance since the previous review in 2016.

After a strong demand-based recovery following the COVID-19 pandemic, economic activity declined amid high inflation. Growth has restarted in mid-2023 and inflation is receding, but fiscal and monetary policies need to work hand-in-hand to fight remaining inflationary pressures and recreate fiscal space to finance future spending needs.

Productivity growth has slowed since the mid-2000s and structural reforms that facilitate new firm entry and exit and a wider take-up of digital tools are needed. Recent reforms to the anti-corruption and public integrity framework will sustain investor confidence if they are fully implemented.

Social transfers keep income inequalities and poverty low but should be better targeted to those most in need. Women face large employment and pay gaps compared to men and intergenerational mobility is limited. Further expanding access to childcare facilities for young children and improving the education system would help to address these challenges.

Hungary’s green transition can build on past progress but needs to accelerate. This will require more electricity supply from low-carbon sources, with price signals acting as a catalyst. Restructuring energy support by moving from price caps to more targeted cash transfers to vulnerable households would strengthen incentives for energy efficiency improvements and reduce fiscal costs.

SPECIAL FEATURE: GREEN TRANSITION