Connect with us

Hi, what are you looking for?

Capital Business
Capital Business
Organisation for Economic Co-operation and Development (OECD) Secretary General Angel Gurria gives a press conference on November 19, 2013 to present the Economic Outlook at the OECD headquarters in Paris/AFP

World

OECD warns of new era of low growth

 Organisation for Economic Co-operation and Development (OECD) Secretary General Angel Gurria gives a press conference on November 19, 2013 to present the Economic Outlook at the OECD headquarters in Paris/AFP


Organisation for Economic Co-operation and Development (OECD) Secretary General Angel Gurria gives a press conference on November 19, 2013 to present the Economic Outlook at the OECD headquarters in Paris/AFP

SYDNEY, Feb 21 – The OECD on Friday warned declining global productivity will usher in a new and extended era of low growth unless there are major structural reforms.

Its new “Going for Growth” report identifies infrastructure shortages and slowing trade activity as key problems — issues that will be in focus at the G20 meeting of finance ministers and central bank governors in Sydney this weekend.

“The widespread deceleration in productivity since the (global financial) crisis could presage the beginning of a new low-growth era,” the Organisation for Economic Cooperation and Development said.

“The global economy’s momentum remains sluggish, heightening concerns that there has been a structural downshift in growth rates compared with pre crisis levels.

“These concerns, already prevalent among advanced OECD countries for some time, now encompass emerging-market economies and are fuelled also by high unemployment and falling labour force participation in many countries.”

OECD chief Angel Gurria said the report came at a time of transition for the global economy, when “we see the recovery strengthening in advanced economies, albeit at different speeds, while growth in emerging economies is slowing”.

“Normally it’s the other way around,” Gurria told reporters in Sydney, noting that key drivers of productivity growth such as credit, investment and trade, had been “very very sluggish, in some cases unusually weak since the crisis”.

Growth was muted, unemployment and economic inequality was rising and the OECD chief said there had been a “big drop in the confidence, in the trust in all the institutions we’ve built up over 50 to 100 years”.

With traditional stimulatory instruments such as fiscal and monetary policy nearing or at their limit, Gurria said “ambitious” structural reform agendas needed to be pursued “with determination by all G20 countries.”

“Stronger demand is indeed fundamental but by no means sufficient to avoid the low-growth trap,” he said.

Advertisement. Scroll to continue reading.

Gurria said the OECD report could be seen as a glass half-full or half-empty assessment.

On the positive side, he said the speed of reform remained “on average well above the pace observed before the crisis.”

Detracting from this, however, momentum had slowed “visibly” in the past two years and reforms were “fragmented, piecemeal, incremental and unlikely to fully address the underlying challenges.”

The report calls for investment in skills to boost labour force participation, and a fresh approach to encourage private investment in infrastructure to help boost growth.

– Global trade slowdown –

“One worrying development is the marked slowdown in global trade activity relative to world production,” the report said.

“And trade-related concerns are magnified by subdued investment in new plant, machinery and equipment as well as in less tangible assets such as research and development or new business processes and workforce training, which are needed to make the most of new technologies.”

The OECD said that business investment rates in most advanced economies were below what would be needed to sustain higher-trend growth rates.

“In several emerging-market economies — notably Brazil, India and Indonesia — infrastructure investment is not sufficient to support high rates of industrialisation and urbanisation, hampering potential growth.”

Advertisement. Scroll to continue reading.

The G20 has sessions on the global economy and growth strategies, both of which have been prioritised by summit chair Australia with Treasurer Joe Hockey.

OECD data released Thursday showed growth in advanced economies slowed down slightly in 2013 to 1.3 percent from 1.5 percent in 2012.

The highest 12-month rate was turned in by Britain with 2.8 percent, followed by Japan and the United States with 2.7 percent.

Click to comment
Advertisement

More on Capital Business

Executive Lifestyle

NAIROBI, Kenya, Mar 12 – The country’s super wealthy individuals are increasing their holding of bonds, gold and cash, a new report by Knight...

Ask Kirubi

NAIROBI, Kenya, Mar 9 – Businessman and industrialist Dr. Chris Kirubi has urged members of the public to exercise extreme caution when making any...

Ask Kirubi

NAIROBI, Kenya, Mar 24 – Businessman and industrialist Dr. Chris Kirubi is set to own half of Centum Investment Company PLC, following a go-ahead...

Headlines

NAIROBI, Kenya, Mar 18 – Commercial Banks have been ordered to provide relief to borrowers on their personal loans, with loans eligible from March...

Ask Kirubi

It is without a doubt that the COVID-19 pandemic has caught the whole world by surprise. Although its full impact is yet to be...

Kenya

NAIROBI, Kenya, Jun17 – Kenya’s tea leaves manufacturer Kericho Gold, has been awarded the Superbrands Seal by Superbrands East Africa for their quality variety...

Coronavirus

NAIROBI, Kenya, Apr 13 – As the local telecommunications industry gears up to roll out 5G networks in the country, the Communications Authority of...

Coronavirus

NAIROBI, Kenya, Mar 22 – Airtel Kenya is offering free internet access for students in order to enable continued learning at home in the...