OECD: global growth too weak to trim inequalities
Print Edition
THE small pick-up in global growth expected this year is not enough to trim inequalities around the world, the OECD said yesterday as it called on nations to launch reforms to remedy the situation.
“We need a more inclusive, rules-based globalization that works for all, centered on people’s well-being” said OECD chief Angel Gurria, as the body released updated economic forecasts.
The Organisation for Economic Cooperation and Development, which provides analysis and policy advice to advanced economies, increased its forecast for global growth this year by two tenths of a percentage point to 3.5 percent on a recovery in global trade, even if remains below the levels before the onset of the global economic crisis.
“This still-modest cyclical expansion is not yet robust enough to yield a durable improvement in potential output or to reduce persistent inequalities,” said the OECD’s chief economist, Catherine Mann.
She said changes to budget policies could improve the well-being of citizens, and have positive effects globally.
Danish Prime Minister Lars Rasmussen, who was presiding over the OECD’s ministerial meeting, warned national policies needed to take into account those left behind by globalization.
“We have to realize that the challenges of globalization also need a national response. Not in a sense of increased protectionism (...), but by making the reforms,” said Rasmussen.
We need “initiatives that ensure job creation instead of job preservation. We need to provide life-long education at all levels to all people in our societies,” he said.
Denmark is a model to many on how to handle the challenge of globalization.
Its “flexicurity” system gives companies the flexibility to easily shed workers when business slows, but workers receive the security of generous unemployment benefits and training programs.
The OECD has found that deeper trade ties with global value chains increased productivity and well-being, but at the same also caused job losses, in particular in manufacturing.
The OECD also updated its country growth forecasts.
It cut its outlook for US economic growth by three tenths of a point to 2.1 percent after a weak first quarter.
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