OECD: countries still need to make reforms to improve growth

20 Sep 17

Structural reforms as well as better use of tax and spending policies are needed to achieve more inclusive growth and boost productivity, wages and skills around the world, the OECD said in its Interim Economic Outlook published today. 

The world economy has picked up but further policy action is needed to ensure sustainable and inclusive medium-term growth, it said. 

Expanding investment, employment and trade support have increased growth across most countries, but the recovery of business investment and trade remain too low to sustain healthy growth and wage growth has been “disappointing on average”.

“The short-term outlook is more broad-based and the upturn is promising, but there is no room for complacency,” said OECD chief economist Catherine Mann.

“Monetary policy should remain accommodative in some economies but with an eye on financial stability so as to remain supportive of further rebalancing towards fiscal and structural initiatives.

“Structural efforts need to be intensified to bolster the nascent investment recovery, to address slow productivity growth and to ensure the recovery yields benefits for all.

The global economy is projected to grow by 3.5% this year and 3.7% in 2018 and the growth of major advanced economies remains on track.

The US growth is estimated at 2.1% in 2017 and 2.4% in 2018, while the euro area is expected to grow at a 2.1% rate in 2017 and 1.9% in 2018.

Major emerging market economies also improved overall, with China’s growth projected to 6.8% in 2017 and 6.6% in 2018.

India saw the impact of its recent demonetisation, which was branded as a failure by the former finance minister, and the implementation of the Goods and Services Tax.

The growth was 7.1% in 2016 and was projected to 6.7% in 2017 and 7.2% in 2018. In the long run, the new tax is expected to boost investment and growth. 

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