Global growth prospects clouded, need coherent response: OECD


Global economic prospects remain clouded in the near term as emerging markets are losing steam and a coherent policy response is needed to boost overall growth, Paris-based think-tank OECD said today.
Noting that India needs to address “a wide range of structural bottlenecks” in order to sustain strong medium-term growth, OECD said there is a severe shortage in public infrastructure in the country.
The Organisation for Economic Cooperation and Development (OECD) said policymakers need to deploy broad-based reform plans to stimulate persistently weak demand, re-launch productivity growth, create jobs and build a more inclusive global economy.
“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,” it said in a report.
“Growth slowdown observed among emerging market economies over the past couple of years also raises questions about their capacity to further closing the income gap vis-a-vis most advanced countries.”
Suggesting measures to boost growth, OECD said the case for structural reforms, combined with supporting demand policies, remains strong to sustainably lift productivity and the job creation that would promote improvements in equity.
About India, the think-tank said the country needs to address a wide range of structural bottlenecks in order to sustain strong medium-term growth.
“The most binding bottlenecks include high labour informality, severe shortages in public infrastructure and low educational attainment,” it added.
Further, OECD noted that informal employment is exacerbated by various rigidities affecting the formal labour markets such as onerous labour regulations and stringent employment protection. Besides, there is high administrative and regulatory burden on entrepreneurship, which hinder job creation, it said.
The report titled ‘Going for Growth 2016′ offers an assessment of how government policy reforms affect economic performance and their citizens’ well-being apart from identifying new priorities to revive growth.
“The worrying slowdown in the global economy calls for an urgent and comprehensive policy response, drawing on all the monetary, fiscal and structural policy levers at governments’ disposal,” OECD Secretary-General Angel Gurria said.