28 November 2017
The key message from the OECD Economic Outlook published today, is for governments to engage “renewed” and “deeper” structural reforms – trade liberalisation and de-regulation, to raise business profitability over so-called “hurdle rates”, which is estimated at no less 14%, and thereby help redress the investment gap since the 2008 crisis. In doing so, the Economic Outlook suggests an unwelcome shift in the OECD recommendations from demand side policy to a business friendly supply side policy agenda close to a classic “trickle down” strategy. This is not warranted.
One key message of the OECD Economic Outlook released on 28 November, is that economic growth is firming up to. After a meager performance in 2016 (1.8%), OECD-wide GDP growth should reach 2.3% in 2017 and in 2018. Yet, growth is projected to level down again in 2019 to 2.1%. For the OECD, a too moderate upturn in business investments is making the economic expansion hit capacity constraints. To remove structural impediments to stronger medium term growth, the OECD therefore recommends to “creating the environment in which business investment will strengthen”, inter alia: product market reforms, liberalisation of trade and regulation, a better public spending mix and labour market measures. Supply-side economics.