OECD calls for G20 structural reforms as global growth prospects ‘remain clouded’

SHANGHAI — The Organisation for Economic Cooperation and Development (OECD) called on Friday around the world’s 20 biggest economies to step up the slowing pace of reforms to enhance economic growth amid sluggish trade and weak investment.

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Finance ministers and central bank governors of the 20 biggest economies, the G20, are meeting in Shanghai over the past weekend to address the weaker global growth outlook.

“Global growth prospects remain clouded soon, with emerging-market economies losing steam, world trade slowing down and also the recovery in advanced economies being dragged down by persistently weak investment,” the OECD said.

“The situation for structural reforms, combined with supporting demand policies, remains strong to sustainably lift productivity and also the job creation,” said the OECD report, prepared for the G20 meeting.

The organization has a task of monitoring reforms within the G20 to help the group deliver on its pledge from 2014 that they’ll increase global economic growth by 2 percentage points by 2018 through a number of coordinated structural alterations in their economies.

At the time, all G20 countries together pledged to deliver some 800 reforms as a whole, however their implementation is lacking, the top from the OECD Angel Gurria told a news conference on the sidelines from the G20 meeting.

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“Just at the time whenever we require it more, when we need to accelerate reform, there’s a deceleration of reform,” Gurria said. “Now you ask , how do we obtain the appetite, the conviction for the reform process going.”

“The problem is it is not happening, even that 2 per cent we agreed on is not happening,” Gurria said. “That is something we’re very worried about.”

The OECD said that the interest rate of reform was generally higher in Southern European countries like Italy and Spain, than among Northern Countries in europe. Outside Europe, the reform leaders were Japan, China, India and Mexico.



The slower-than-expected growth, specially in the world’s second-biggest economy China, has added to uncertainty and volatility on financial markets, as ultra low or even negative rates of interest haven’t provided the expected growth stimulus yet, but have previously reduced returns on investment.

“Finance industry is increasingly volatile as capital looks for both yield and safety,” the OECD said.

“Getting back to healthy and inclusive growth requires urgent policy response, drawing on monetary, fiscal, and structural policies cooperating,” the report said.

G20 financial leaders will discuss on Friday and Saturday how to better coordinate their policy response by trying to identify which policy areas and which countries still had room for maneuver to do more.

“This 2016 Opting for Growth report underscores the significance of synergies among policies in designing policy packages,” the OECD said.

Germany, having a fiscal surplus, an enormous current account surplus in excess of 8 percent of GDP and relatively low investment, is likely to be asked to step up spending, G20 officials said.

? Thomson Reuters 2016