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BADEN-BADEN: Governments are slacking the pace of needed economic reforms amid waning popular support even as global growth slows, the Organization for Economic Co-operation and Development (OECD) warned Friday.
There had been progress in reducing unemployment, the rich nations’ club conceded in its annual “Going for Growth” report, unveiled at a G-20 gathering of top economies’ finance ministers in the western German spa town of Baden-Baden.
But too many, including women, migrants and young people remain excluded from the benefits of a tentative economic recovery in many advanced and emerging economies, the OECD experts said.
“In many countries what we are seeing is a slow growth track,” OECD Secretary-General Angel Gurria told journalists at the G-20 gathering.
“Poor growth outcomes combined with rising inequality, falling trust, stagnant incomes are contributing to a backlash against globalization... which is bringing a rise in populist and protectionist policies,” he continued. “It is precisely because of this context that ambitious reforms are needed, to escape the low growth trap.”
The growing political potency of inequality prompted the OECD to offer for the first time advice to countries on making growth “inclusive,” alongside its long-standing productivity and employment goals.
Reforms had visibly slowed, both in countries that had made significant progress in recent years — such as Mexico, Ireland and Spain — and others like Colombia, Italy and Sweden, already among the “least active” reformers, the economists found.
While more countries had moved to lift barriers to women working and cut taxes on lower-paid workers, many focused on one area to the exclusion of complementary ones, they said.
Looking ahead, the OECD recommends improving productivity by broadening access to education, training and jobs, freeing up competition, and increasing investment in public infrastructure.
Meanwhile, social safety nets should be used to reduce income inequality, the experts advised.
“Growing inequality becomes an obstacle to growth,” said OECD chief. “It is not just morally wrong, it is ethically wrong, it is politically very explosive, but it is also economically very inefficient.”
Gurria, a former finance minister of Mexico, insisted that gatherings like the G-20 remain relevant even as the new White House administration under Donald Trump challenges a tried-and-tested multilateral global order.