The global economy should be growing at a much faster pace, the chief economist of the Organization for Economic Cooperation and Development (OECD) warned on Sunday, as world leaders agreed on hundreds of measures they hope will boost expansion.
“As the emerging markets become a greater share of the global economy, we really ought to be seeing the global economy growing at 4 or more percent, so the tone is dour,” said OECD Chief Economist Catherine Mann, speaking to CNBC at the G-20 summit in Brisbane over the weekend.
Growth of 4 percent is well behind the group’s projected global gross domestic product (GDP) of 3.3 percent for this year. In its latest Economic Outlook, published earlier this month, the OECD warned of “major risks on the horizon” for the world’s economy, such as further market volatility, high levels of debt and a stagnation in the eurozone recovery.
Mann’s comments come as world leaders at the G-20 agreed on measures they said will equate to 2.1 percent new growth, inject $2 trillion into the world economy and create millions of jobs. The Paris-based OECD has previous outlined a target of adding around 2 percentage points to global gross domestic product (GDP) by 2018, relative to the 2013 level.
Hold Them Accountable
To achieve a faster growth rate, Mann said that countries had given the OECD a range of commitments – and the focus was now on holding them accountable.
“Our job is to say to countries: OK, you’ve told us what you’re going to do, so next year we’re going to look at what you’ve said you’re going to do and determine whether or not you’ve done it. It’s challenging. It’s absolutely a process,” she said.
World leaders at the summit in Brisbane agreed on around 800 new measures on issues including employment, global competition and business regulations.
Focus on Infrastructure
Mann was optimistic that job creation would increase in tandem with global growth, as countries ramped up infrastructure investment.
“We know that there’s usually a relationship between growth and jobs. It’s not always a tight relationship. There’s always an issue about the distribution, where the jobs are being created, what sectors, what countries and some of the disconnect there can be,” she said. “Mismatch can be a problem, but I do think we are going to see job creation go hand-in-hand with global growth.”
One way to boost global growth is a renewed focus on infrastructure, and Mann stressed there was a “significant deterioration” in infrastructure around the world.
“Every country needs to have more bridges, or rebuild bridges and ports,” she said.
