OECD: Israeli growth to exceed average rate

Israel’s gross domestic product is expected to grow at an average annual rate of 2.6 percent between now and the year 2060, compared with 2% among all developed countries, according to the Organization for Economic Cooperation and Development (OECD).

In its report “Looking to 2060: Long-term global growth prospects,” the OECD predicted that the American economy will expand by an annual rate of 2.1% in the next 50 years, while India’s will grow by 5.1%, China’s by 4.1% and Brazil’s by 2.8%.

The report predicted that Israel will experience economic growth of 2.7% from 2011-30, slowing to 2.6% in 2030-60. Economic growth reached an average rate of 3.7% from 1995-2011.

GDP per capita, which rose 1.5% annually from 1995-2011, is predicted to grow at 1.3% from 2011-30 and 1.6% from 2030-60.

Israel did not feature prominently in the report, which focused on the shift in growth from developed countries to emerging countries. But it was singled out as one of four OECD member states that would benefit most from potential structural reforms, along with South Korea, Italy and Belgium.

The OECD conducted a simulation in which all its members conducted deep labor-market reforms, while imagining that the average duration of individual active life converged toward the standard set by Switzerland. It concluded that participation would increase on average by 2.7 percentage points to 62% in 2060, rising most markedly in Italy (+13%), Korea (+9%) and Israel (+8%).

On the other hand, the report predicted that Israel would be one of six OECD countries to suffer a fall of at least eight percentage points in private saving rates by 2060. It concluded that demographic developments, combining the effect of changes in old-age and youth dependency with life expectancy, should reduce the private saving rate of the median OECD country by about five points.