Social progress over the past two decades has been impressive. But growth has not been inclusive enough due to insufficient employment growth. Macroeconomic policies are stabilising inflation and public debt. Tackling infrastructure bottlenecks and improving business regulation would boost job creation. Improving wage negotiations and job matching would also promote more inclusive growth.
The New Zealand economy has performed well in recent years, and well-being is high. However, bottlenecks in housing and urban infrastructure, inequalities in living standards, and rising environmental pressures are all challenges to achieving sustainable and inclusive growth.
Continued structural reform is key to stronger growth. Bank balance sheets need further improvements and corporates have too much debt. Fiscal consolidation should focus more on structural measures, especially given the ageing pressures.
Gross government debt has risen to 226% of GDP. Rapid population ageing is putting continued pressure on public spending, while pushing down Japan’s potential growth rate to around ¾ per cent. Bold reforms are needed to revitalise the economy.
The key challenge is to reform the labour market to promote job growth. Further labour market reforms should be the top priority. The strong protection accorded by open-ended contracts hinders labour mobility, despite the progress brought by reforms regarding mass layoffs and the introduction of the rupture conventionnelle, a mutually agreed termination procedure.
Sweden has been one of the OECD’s top economic performers in recent years. Nevertheless productivity has slowed and low-skilled youth and immigrants face difficulties finding jobs. Investing in innovation and skills is key to raising living standards and well-being further.
Strengthening the research infrastructure and the education system, competition-friendly regulation in the services sector and raising female labour force participation are important for new innovative industries, skills and more economic diversification.
Growth has slowed recently, and the backlog of required reforms is mounting. The government needs to increase revenues to finance higher spending on infrastructure, social security, education and health. Natural resources should be better managed.
The Chinese economy has performed extremely well and is now transitioning to slower but healthier growth – the “new normal”.
Growth in the United Kingdom has picked up, supported by a wide range of domestic policies. A balanced recovery requires higher productivity growth and would benefit from raising infrastructure investment and ensuring sustainable bank lending.