BY Richard Summerfield
Though we are eight years removed from the last financial crisis, growth in the global economy has remained patchy at best. Improvements in advanced economies have remained subdued and the world’s emerging economies, once engines for growth, have also begun to splutter and fail. Global trade remains sluggish and overall investment has been weak. The stuttering Chinese economy in particular has hindered global growth over the last year or so, increasing global volatility.
With global growth prospects likely to remain cloudy for some time, the Organisation for Economic Cooperation and Development (OECD) has called upon the world’s 20 biggest economies to rise to the challenge and act quickly in order to improve growth. According to a recent report from the OECD – the 2016 Going for Growth Interim Report – the G20 nations must improve the pace of structural reform to boost global economic growth.
As it stands, the G20 countries will likely miss their 2014 pledge to boost their combined GDP by 2 percent by 2018. “According to the joint assessment by the International Monetary Fund, OECD and World Bank…more effort is needed for the full and timely implementation that would be needed to meet the GDP objective", says the report.
Two years ago the countries had promised to implement around 800 reforms in total; however delivery of those reforms to date has been substandard, according to the OECD.
Though some progress has been made in terms of recent structural reform, countries must do more to quicken the pace of change. "Global growth prospects remain clouded in the near term, with emerging-market economies losing steam, world trade slowing down and the recovery in advanced economies being dragged down by persistently weak investment," the OECD says. "The case for structural reforms, combined with supporting demand policies, remains strong to sustainably lift productivity and the job creation."
According to the report, the pace of reform was generally higher in Southern European countries like Italy and Spain, than among Northern European countries. Outside Europe, the reform leaders were Japan, China, India and Mexico.
The OECD has called upon the G20 nations to improve their policy coordination moving forward, as policy synergies will help stimulate growth.
Report: Going for Growth Interim Report