Since we last met in mid-October, strict containment measures have been re-imposed in several G20 countries, which have slowed the economic rebound. There are some promising news on the vaccine front. But it’s still going to take time for vaccines to be made widely available.
If we assume widespread vaccination is not available until late 2021, next year remains one of transition as well as a moment to build the foundations for a stronger, more resilient, more inclusive and more sustainable global economy.
The OECD´s recovery report we have prepared at your request outlines some key policy priorities going forward:
First, we must continue to support the people and viable businesses hit hardest by the pandemic until the vaccine is widely available, through targeted job retention schemes, accommodative financial conditions, liquidity support and well-selected equity infusion, and help for SMEs to go online. It is critical to prevent a potential “tsunami” of corporate bankruptcies next year - which would result in a massive increase in non-performing loans, damaging banks’ balance sheets, impairing their credit intermediation function and turning this “real economy” crisis into a banking and financial crisis.
Second, it will be essential NOT to freeze the economy altogether and to ease transitions and resource reallocation by helping people find new jobs via re-skilling and job placement policies; by re-injecting dynamism into our economies through reformed competition laws for the digital age and effective bankruptcy laws; and by increasing public and private investment in health and digital, including digital infrastructure.
Third, we must align the recovery with the commitments of the 2030 agenda and the Paris Agreement. Our single, most important, inter-generational responsibility, is with the Planet. Policymakers must provide clear policy signals through a variety of instruments, such as environmental taxes and regulations. Government support measures could also be made conditional on efficiency and environmental performance improvements. The G20 can help in articulating the ever-increasing number of sustainable finance standards to reach better clarity for global market players and prevent the risk of green and SDG- “washing”.
Dear Chair, I want to congratulate you for the tremendous efforts in bringing forward multilateralism when and where it is most needed. We very much look forward to making further progress to “build back better” under the leadership of Italy in 2021.