News

Calls for urgent action to boost global economic growth

The Organisation for Economic Co-Operation and Development (OECD) is calling for urgent action to be taken by world leaders in a bid to tackle slowing growth.

This comes after the slowest level of global growth for five years in 2015 and 2016 of 3%, with a forecast for 2017 of 3.3% [1]. This is “well below long-run averages” and lower than what would be expected of advanced economies in the recovery stage of the economic cycle [2].

OECD Chief Economist Catherine L Mann said: “Given the significant downside risks posed by financial sector volatility and emerging market debt, a stronger collective policy approach is urgently needed, focusing on a greater use of fiscal and pro-growth structural policies, to strengthen growth and reduce financial risks” [2].

Following the call to ease up on austerity, the OECD criticised the over-reliance on monetary policy, low interest rates, and the money-creation process known as quantitative easing, urging countries to adopt a more balanced approach.

The OECD said: “Monetary policy cannot work alone. A stronger collective policy response is needed to strengthen demand” [3].

In the past, it has supported the deficit-reduction programme taken by Chancellor, George Osborne, but now believes Britain should join with other countries in spending more on public investment.

“In a turbulent economic climate, we need to show resilience and resolve, and keep taking the action necessary to restore order to the public finances and deliver economic security for working people,” Osborne said [4].

 

[1] Financial Times. ‘Urgent action needed to boost global growth’. ft.com

[2] OECD. ‘Elusive global growth outlook requires urgent policy response’. oecd.org

[3] BBC News. ‘OECD: Urgent action needed to boost flagging global growth’. bbc.co.uk

[4] The Guardian. ‘OECD calls for less austerity and more public investment’. theguardian.com