President Katerina Sakellaropoulou,
Your Excellencies,
President of the Delphi Forum Symeon Tsomokos,
Ministers,
Distinguished guests, Friends of the Delphi Forum all,
Thank you for the very warm welcome back to Delphi.
This is my third Delphi Economic Forum in my third year as OECD Secretary General.
This Forum continues to be a valuable opportunity, yes to share observations on recent developments in the economy and our geopolitical environment, but also to consider the longer term outlook and the policy implications of continuing structural transformations across our economies and societies.
How we can drive further growth and opportunity, by boosting productivity, including through the responsible and ethical harnessing of new technologies such as AI.
How we can best ensure well functioning global markets where the benefits of a sustainable expansion of global trade are fairly and appropriately shared.
How we can transform our energy and transportation systems and better co-ordinate our efforts to tackle climate change to ensure policy approaches are globally effective and fair.
How do we need to adjust our fiscal, education, skills, migration, pension and social support policies to respond to the economic, social and fiscal implications of population ageing.
How can we better facilitate international co-operation to tackle the shared global challenges in front of us at a time of heightened geopolitical tensions and conflicts.
How can we strengthen and re-enforce democracy at a time new and increasing pressures, for example by tackling mis- and disinformation challenges turbocharged by the opportunities created through the digital transformation.
At the OECD, Greece has a long tradition of supporting long-range thinking, encouraging our policy experts and indeed our Ambassadors assembled in Council to question assumptions and improve our policy foresight.
This includes systematically identifying all the key drivers of future uncertainty, risks and opportunities across the broad spectrum of economic, social and environmental policy and to help us build up our resilience to potential shocks.
The good news is that the global economy continues to show great resilience.
Despite everything that has been going on in recent years, the global economy continues to grow, unemployment remains low while inflation is declining.
Global trade, albeit still weak, is showing signs of improvement, with an upturn in semiconductor production in Asia and stronger global car sales bolstering merchandise trade, while services trade continues to benefit from the recovery of international tourism.
Global financial conditions have recently begun to ease, with long-term risk-free bond yields declining and credit spreads narrowing. Though financial conditions do remain relatively restrictive almost everywhere.
According to our latest projections from February, we expect global GDP to grow by 2.9% this year and 3.0% next year.
And we project inflation in G20 countries to decline from 6.6% this year to 3.8% next year.
By the end of 2025, we expect inflation to be back to central bank targets in most G20 economies – with Argentina and Türkiye the two exceptions.
Since 2021, Greece has continued to outperform the euro area as a whole.
Our most recent forecasts from November 2023 project Greek GDP to grow by 2.0% this year and 2.4% next year – though weaker than expected growth in the last quarter of 2023 may lead to a slightly lower outcome.
Despite this resilience in the global economy, there remains a lot of uncertainty about the outlook – in particular geopolitical risk and the risk that disinflation may proceed more slowly than expected or that past policy rate increases could have stronger effects than anticipated.
However, policymakers around the world, including here in Greece, will need to lay the policy foundations for a prosperous future today – to support long-term growth, and grapple with the continuing significant long-term structural reform challenges in front of us.
First, global trade needs to be reinvigorated.
Open international markets operating within a rules-based global trading system based on a level playing field for global trade drive growth and increases in incomes and living standards around the world.
There has been a long-term slowdown in trade openness since the global financial crisis.
Global value chain integration has slowed, restrictive trade policies have increased and domestic policies are becoming more inward-focused.
The COVID-19 pandemic and the supply chain disruptions that followed have highlighted the importance of free and open trade.
Growing geopolitical tensions and genuine national security concerns are posing new challenges for globally integrated markets.
More trade and more investment mean stronger growth, more jobs, higher incomes and lower costs for consumers.
Globally – but also here in Greece.
The Greek shipping industry accounts for one fifth of total export and is dependent on open and safe maritime shipping routes.
Governments should strive for more resilient global value chains and avoid excessive concentration of their production, supply or consumer base, without eroding the benefits to reduce costs or increase incomes by lowering trade barriers
A second policy priority is to confront the challenge of population ageing.
The combination of declining fertility rates and rising life expectancies is shifting the composition of the workforce towards older workers:
- Back in the year 2000, across the OECD there were 23 adults aged 65 and over for every 100 people of working age.
- Today that number has grown to 34, and by 2050 it is expected to reach 53 – that is, the group of adults aged 65 and over across OECD countries is expected to be more than half the size of the working-age population.
This development affects labour markets by reducing the number of workers. Lower workforce participation levels, all other things being equal will mean lower growth and hence lower incomes for governments at a time when public demand for social and health care services and pensions will continue to go up and up.
We will need to address the challenge of population ageing through a combination of measures – including by boosting workforce participation by underrepresented groups in the labour market. We need to boost workforce participation by women, as well as younger and older workers.
That means reforms of policies which better support balancing work and care responsibilities, to promote longer working lives and to ensure the sustainability of the pension, healthcare and long-term care systems.
International migration can also help address population ageing, but it needs to be well managed and requires a commitment to effective economic and social integration.
The new OECD Centre for Population Dynamics – the Crete Centre – strengthens our understanding of demographic challenges, including those related to ageing and migration.
We are looking forward to working with the Delphi Economic Forum on the first international Crete Conference for Dialogue on Population, which will deepen our understanding of the impact of ageing on public finances, the interactions between ageing, productivity and growth, and migrant entrepreneurship.
Boosting productivity growth will be a key step to further enhance living standards among a declining population.
Especially so in Greece, which is still about a third less productive than the average OECD economy.
But productivity growth across OECD economies has also significantly declined over the last 20 years.
Action in several areas is necessary to reverse this trend.
Effective competition enforcement and reduced regulatory barriers to entry are important to help ensure that markets are genuinely contestable by new innovative firms.
Digital infrastructure – such as broadband access – needs to be enhanced to help firms reach their potential, including through fostering competition among digital service providers and streamlining administrative procedures for network deployment.
Improving the quality of education and skills will ensure that we have the human capital required to underpin productivity growth.
Dynamic and open higher education systems coupled with widespread opportunities for upskilling and re-skilling are all important to provide the best possible opportunity to participate in changing labour markets.
These are just some of the shared challenges that are best tackled together.
At the OECD, we are committed to support policymakers around the world to develop sound and well-coordinated policy responses to each of the structural shifts in front of us, grounded in our shared values of democracy, the protection of human rights, the rule of law and market-based economic principles, will be essential.
We look forward to continuing to work together to support better policies for better lives.
Thank you.
