G20 Finance Ministers and Central Bank Governors Meeting
Session 2: Framework for Strong, Sustainable and Balanced Growth
Remarks by Angel Gurría,
Chengdu, 23 July 2016
(As prepared for delivery)
Ministers, Central Bank Governors,
Structural reforms – together with monetary and fiscal policies – are essential to achieving the G20 objective of strong, sustainable and balanced growth.
They have been at the heart of the OECD’s work for more than 30 years and courageous decisions at different times in our countries – Canada, Germany, Korea and Spain to name but four – have delivered stronger and more inclusive growth for our citizens.
I welcome the efforts by the Chinese Presidency to enhance the G20 structural reform agenda. The OECD is proud to have worked closely with the G-20 to support this initiative. Progress has been made on three levels, with agreement by members on:
The OECD will be happy to report to the G20 on the progress in these priority structural reform areas, using both the indicators that members have developed, as well as the OECD’s own indicators measuring the restrictiveness of Product Market Regulations (PMR) that impede competition, trade and investment.
Where does the G20 stand with its existing structural reform commitments?
At Shanghai, I shared the OECD’s worrisome assessment that the pace of structural reform is slowing as measured in our annual Going for Growth flagship publication. I am afraid to say that the joint OECD-IMF-World Bank assessment of progress towards the G20 Brisbane structural reform commitments confirms our concerns.
Based on preliminary estimates, only 53% of measures have been fully implemented, not much higher than the 49%% that we reported at Antalya last November. While some measures are still in the pipeline, a number of “big ticket” items in larger economies seem to be stuck there for now.
Looking at the G-20’s objective to raise GDP by 2% by 2018, the current estimate is around 1.0% compared with 0.8% at Antalya last year. Time is running out to make reforms that would have an impact by 2018!
It is essential for the G-20’s credibility that these commitments are fully implemented in a timely manner.
The draft Hangzhou Action Plan contains more than 300 specific policy commitments. It includes decisive measures to be taken by China, France, India and Italy.
However, this is not the breakthrough the world economy needs to get out of the “low-growth trap”!
What should countries be doing?
The OECD has provided two notes to Ministers on trade and investment policy priorities to restart these two vital engines of growth, building on our work in the Sherpa track and our extensive expertise. It is of particular concern that the Hangzhou Action Plan contains fewer trade-related measures than the Brisbane or Antalya plans. Especially since Trade Ministers in Shanghai recently agreed to step up efforts to streamline customs procedures and cut red tape - through the ratification of the Trade Facilitation Agreement - and to advance the trade in services agenda. Such trade and investment measures are key elements of structural policy reform, providing a debt-free source of economic stimulus.
We also need to enhance the benefits of a digital and more innovative economy. The G20 Blueprint on Innovative Growth is an important contribution to developing new sources of future growth, together with G-20 work on Innovation, the New Industrial Revolution, and the Digital Economy.
As highlighted in Cancun last June, at the OECD’s Ministerial on the Digital Economy, to unlock the economic potential of digitalisation in our economies and societies, countries must adopt coherent, whole-of-society policies that stimulate investment in digital infrastructure, reduce barriers to the use of digital technologies, and address the emerging skills needs. This helps create the conditions for innovation where new businesses will thrive, new jobs will emerge and a more productive economy will deliver benefits to consumers and society.
The main problem is not about “what to do” - the diagnosis is clear – but about doing it: making reform happen.
For a long time, the conventional wisdom was that “we all know what to do, we just don't know how to stay in power after we've done it”.
However, rising populism and political pressure show that “doing nothing” is no longer an option. We need to meet our citizens’ aspirations for stronger and more inclusive growth.
Today’s “low-growth” trap means that we will have to break the promise of a better future for our young people, the promise of stable and high-quality jobs for our workforce and a decent retirement for older people.
So let’s get out of the low-growth trap. Let’s display far greater ambition on reforms to boost trade, investment and innovation! Let’s design develop and deliver better policies for better lives!