Remarks by Angel Gurría
Washington D.C., 12 October 2017
(As prepared for delivery)
Ministers, Central Bank Governors,
The stronger short-term momentum in the global economy is welcome, but can it be sustained?
The latest OECD Interim Economic Outlook forecast global GDP growth to increase from around 3% last year to just over 3½% this year and next. Supported by policy stimulus, growth performance has been strong in the first half of the year and more synchronised across the world. Argentina, Brazil and Russia are returning to growth.
But, this will still leave growth below past norms. Stronger business investment and faster trade growth are still needed to boost sluggish productivity and, alongside widespread gains in wages, to deliver the shared improvements in living standards our citizens demand.
We also need to keep a close eye on risks that have built up in financial markets. High private debt leaves emerging economies vulnerable to shocks in interest rates. In advanced economies, risks of snap-backs in asset prices should not be overlooked.
The OECD is happy to have contributed to the IMF’s new report on Progress towards Strong, Sustainable and Balanced Growth. This report underlines that the G20 – almost a decade after the financial crisis – is still too far from its objectives. Some countries still need to deliver fiscal easing and governments should ensure that fiscal levers be used in a smart way – with a better mix of tax and spending policies and more qualitative public spending - to deliver long-run supply and inclusive growth.
But, the biggest missing piece is structural reform.
We know that we need to remove barriers to trade and business to revive the stalled diffusion of innovation and boost productivity – in other words, to fire up the missing cylinders of the current global upturn. To deliver a more inclusive type of growth, we need to bolster employment, invest in skills, make social protection work better and help vulnerable workers transition to new jobs. The digital transformation raises new challenges that will only accentuate the need for structural evolutions in our economies.
Although some countries are already undertaking the necessary reforms to transform their economies, OECD analysis shows that progress on structural reform has slowed across much of the G-20 in recent years.
Thus the G20 should stay focused on an ambitious structural reform agenda, even beyond the “2 in 5” process. Following recent discussions in the Framework group, the OECD stands ready to lead a new integrated annual report on structural reforms, building on the G20’s Enhanced Structural Reform Agenda, as a counterpart to today’s report on macroeconomic policies. This would shine a light on both the reforms that members have already undertaken as well as those required going forward.
I would be happy to present this to you next spring to design, develop and deliver better policies for better lives.