G20 countries urged to come to table on pace of reforms

SHANGHAI: The Organisation for Economic Co-operation and Development has called on the world’s 20 biggest economies to step up the pace of reforms to boost economic growth amid sluggish trade and weak investment.

Finance ministers and central bank governors of the 20 biggest economies, the G20, are meeting in Shanghai at the weekend to address the weaker global growth outlook.

“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 said yesterday.

“The case for structural reforms, combined with supporting demand policies, remains strong to sustainably lift productivity and the job creation,” said the OECD report, prepared for the G20 meeting.

The organisation has a task of monitoring reforms in the G20 to help the group deliver on its pledge from 2014 that it will increase global economic growth by 2 percentage points by 2018 through a series of coordinated structural adjustments to their economies.

At the time, all G20 countries pledged to deliver some 800 reforms in total, but their implementation is lacking, the head of the OECD, Angel Gurria, told a news conference on the sidelines of the G20 meeting.

“Just at the time when we need it more, when we need to accelerate reform, there is a deceleration of reform,” Gurria said. “The question is how do we get the appetite, the conviction for the reform process going.

“The problem is it is not happening, even that 2 percent we agreed on is not happening,” Gurria said. “That is something we are very worried about.”

The OECD said that 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 slower- than- expected growth, especially in the world’s second- biggest economy, China, has added to uncertainty on financial markets as ultra- low or even negative interest rates have not provided the expected growth stimulus yet, but have already reduced returns on investment.

G20 financial leaders will discuss how to better co-ordinate their policy response by trying to identify which policy areas and which countries still had room for manoeuvre to do more.

“This 2016 Going for Growth report underscores the importance of synergies among policies in designing policy packages,” the OECD said.

Germany, with a surplus of more than 8 percent of GDP and relatively low investment, is likely to be asked to step up spending. – Reuters