Fiscal deficit of OECD countries falls to 4.6% of GDP in 2023, biennial report shows

The fiscal deficit of countries in the Organization for Economic Cooperation and Development (OECD) fell to 4.6% of Gross Domestic Product (GDP) in 2023, according to a biennial report on global public governance, released this Thursday, 19. The result is an improvement compared to the previous report, which showed a deficit of 7.5% in 2021, but remains well above the pre-pandemic average of 2.9%.

The report highlights that six countries in the organization had a surplus in 2023, while another 31 registered deficits. In 2021, only four countries had achieved a surplus.

The OECD notes that government spending also declined, from 48.3% of GDP in 2021 to 42.6% of GDP in 2023, due to the disappearance of government stimulus measures to mitigate the effects of the COVID-19 pandemic. Even so, in most OECD countries, spending remained above the pandemic period, with the exception of Australia, Norway, Denmark, Switzerland, Ireland, Sweden and Portugal.

Public investment rose by an average of 0.2 percentage points (pp) in OECD countries in 2023, to 3.5% of GDP, reflecting increases in 24 of the 37 countries analyzed. Specifically in the defense sector, OECD countries spent an average of 2.2% of GDP, while the European Union (EU) countries that belong to the OECD invested 1.3%, both stable compared to 2021. Defense spending in the United States fell from 3.3% to 3%. Among those analyzed, Israel had the largest defense investment in 2023, at 6.1% of GDP, an increase of 1 pp.

The survey also showed that 59% of the population in the countries analyzed identified inflation as one of their main concerns, followed by social inequality (33%) and unemployment (22%). According to the report, 12.6% of young people fell into the “neither studying nor working” category, down from 15% in 2021.

More than a third of the population believes that governments meet their needs, compared with 41% who disagree, and almost all OECD countries are conducting a spending review to restore their public finances by 2023.