Finance is a vital ingredient of economic growth, but there can be too much of it. Over the past 50 years, credit by banks and other institutions to households and businesses has grown three times as fast as economic activity. At these levels, further expansion is likely to slow long-term growth and raise inequality.
In our new Economic Outlook, we show that the world economy remains stuck in a low-growth equilibrium of low investment, high unemployment, low productivity and low wage growth. The process of healing from the biggest crisis in our lifetime has been very slow. And we are still suffering from its legacies.
Slovenia has made an impressive turnaround in a short time. And this has laid the foundations for better times to come. But a positive outlook should not lead to complacency: future growth will only come if reforms are completed, and implemented fully.
In his speech delivered at the Brookings Institute, OECD Secretary-General Gurría explains that OECD’s numbers tell a clear-cut story of how our traditional economic growth agenda has neglected inclusiveness. Yet to begin to tackle this problem, we have to understand that inequality is not just about money. It touches every area of people’s lives.
Small and medium-sized enterprises are crucial for tracing new paths to more sustainable and inclusive growth, thanks to their role in providing employment. In the OECD area, SMEs provide the main source of employment and value creation, accounting for about 60 to 70% of employment and more than 50% of value added.
It is a great pleasure to open this sixth Annual Conference of the Institute for New Economic Thinking (INET), under the very provocative title of “Liberté, égalité, fragilité”.
Last time I addressed the Committee in November 2013, we were still in crisis mode. Two weeks ago, the OECD released its Interim Economic Outlook and it seems that the Spring of 2015 has brought encouraging signs for the global economy. Lower oil prices and widespread monetary easing have raised the potential for the acceleration of growth that is so needed in many countries, especially in Europe.
Where many countries are still struggling with the legacies of the global financial crisis, Sweden is proving to be one of the more resilient economies in Europe and the OECD. This is very encouraging. Let me share with you our perspective of the Swedish economy, of its resilience, but also of the key challenges ahead and possible ways to address them.
It’s a pleasure for me to be able to open an Economic Survey speech with a truly positive message. I’ve launched many surveys throughout the OECD in difficult times. There haven’t been many other occasions over the last years where I could stand up and say: things are looking good!
It has been a great honour to welcome President Cavaco Silva to the OECD – the first ever visit to the OECD by a Portuguese Head of State.