Economy

G20 Finance Ministers and Central Bank Governors meeting: remarks on the global economy and framework for growth

 

Remarks by Angel Gurría,

OECD Secretary-General

Washington, USA, 20 April 2017

(As prepared for delivery)



Ministers, Central Bank Governors,


Latest indicators of rising business confidence and industrial production are welcome. However, we have been here before over the past five years and left “Waiting for Godot” – for the recovery that never comes.


There are reasons to be more optimistic this time around. But we have not yet decisively escaped the low-growth trap. Growth in productivity and wages remains lackluster. Inequality and political tensions are high.


Under the Chinese G-20 Presidency, you agreed on a G-20 “Enhanced Structural Reform Agenda” to achieve strong, sustainable and balanced inclusive growth. This sets out 9 priority areas and G-20 Principles for structural reform.


You asked the OECD to assess overall reform progress every two years using this framework. Today, I am pleased to present this report to you for the first time. It confirms the diagnosis from the OECD’s Going for Growth that I presented to you in Baden Baden.


Progress has been made on a number of fronts. In emerging economies, there have been significant reforms to boost productivity by promoting trade and competition, improving infrastructure and encouraging innovation. In advanced economies, there has been more focus on boosting employment and skills.


However, progress is too slow and modest, compared to the scale of the challenges: productivity growth slowed in advanced economies before the crisis, a deceleration which became widespread and sharper across the entire G-20 membership after 2011. Unemployment is certainly declining, but employment rates remain well below the pre-crisis level in several G20 countries. Inequality has increased in many countries and the stagnation of incomes at the lower end in advanced economies is creating a backlash. Progress on environmental sustainability is welcome, but leaves the G-20 a long way short of its objectives set out in the Paris agreement.


Against this background, we should be worried that the overall pace of structural reform – as measured by the OECD’s Going for Growth – has slowed in recent years. Progress can be stepped up on promoting trade, investment, structural and fiscal reforms in all G-20 countries.


But this should be part of a broader reform agenda that enables people to fully harness the potential of the digital revolution in the making, and break the low-growth / low-productivity trap in which the global economy is caught. As I told your colleagues responsible for the digital economy, in Dusseldorf, a couple of weeks ago, we need more investment in infrastructure, particularly digital infrastructure – because high-speed Internet access is essential for the social and economic participation of individuals and businesses worldwide. We also need to invest in skills for the digital age, and bridge the digital divide, including its gender dimension, that risks hindering the uptake of digital technologies and STEM related economic opportunities. Investing in education and skills is one element of a whole-of-government policy agenda required to address the high levels of inequality, which is a key imperative if we are to revive productivity and embrace all the opportunities of the 21st century economy.


I hope today’s assessment by the OECD contributes to developing ambitious national Growth Strategies for the Hamburg Action Plan, which will deliver a new, faster path to resilient, sustainable and inclusive growth.