Declining global productivity will give rise to a new and extended era of low growth unless there are major structural reforms, OECD said on Friday.
The Organisation for Economic Co-operation and Development (OECD)’s latest 'Going for Growth report' said, “Adopting ambitious and comprehensive structural reform agendas will offer governments the best chance for a return to strong, sustainable and balanced economic growth that creates jobs and reduces inequality.”
The report assesses and compares progress that countries have made on structural reforms since 2012 and takes a fresh look at what else can be done to revive growth and make it more inclusive
The OECD shows that most governments have continued enacting reforms, despite the challenges posed by a subdued growth environment. It also highlights actions that can still be taken to boost productivity, raise public sector efficiency, improve educational outcomes, and strengthen the labor market.
“Signs of a broad-based recovery are becoming more tangible, but governments of advanced and emerging economies now face the risk of falling into a low-growth trap,” OECD Secretary-General Angel Gurria said.
“Progress on structural reforms can boost growth and living standards worldwide,” the OECD chief Gurria said. “Slowing productivity growth with persistently high unemployment in many advanced economies cries out for further reforms. The vulnerability of many emerging-market economies on the ongoing tightening of monetary policy, and the cooling of the commodity boom serves as a reminder that the case for structural reforms is also strong there."
The report indicated that the intensity of reforms has remained highest in southern euro area countries like Greece, Italy, Portugal and Spain, which are suffering from high long-term unemployment and youth joblessness.
"Considerable action to reform the labour market and to break down barriers to job creation have been taken, in particular in Spain and Portugal, which have begun growing again," the report says.
“Many emerging economies have yet to launch comprehensive structural reform agendas, and should implement wider efforts to improve education, address physical and legal infrastructure bottlenecks and bring more workers into formal sector employment,” the report added.
The OECD also asked advanced and emerging economies to boost competition across their economies.
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