World: OECD: global growth too weak to trim inequalities

THE small pick-up in world increase expected this year is not enough to trim inequalities around the world, the OECD said yesterday as it called on nations to launch reforms to remedy the situation.

“We need a additional inclusive, rules-based globalization that works for all, centered on people’s well-being” said OECD chief Angel Gurria, as the body released updated economic forecasts.

The Organisation for Economic Cooperation and Development, which provides analysis and policy advice to advanced economies, increased its estimate for world increase this year by two tenths of a % point to 3.5 % on a recovery in world trade, even if remains below the levels before the onset of the world economic crisis.

“This still-modest cyclical expansion is not from presently on robust enough to yield a durable development in potential output or to reduce persistent inequalities,” said the OECD’s chief economist, Catherine Mann.

She said changes to budget policies could improve the well-being of citizens, and have positive effects globally.

Danish Prime Minister Lars Rasmussen, who was presiding over the OECD’s ministerial conference, warned national policies needed to take into account those left behind by globalization.

“We have to realize that the challenges of globalization as well need a national response. Not in a sense of increased protectionism (...), but by making the reforms,” said Rasmussen.

We need “initiatives that ensure job creation instead of job preservation. We need to provide life-long education at all levels to all people in our societies,” he said.

Denmark is a model to a lot of on how to handle the challenge of globalization.

Its “flexicurity” system gives companies the flexibility to easily shed workers at the same time as business slows, but workers receive the security of generous unemployment benefits and training programs.

The OECD has found that deeper trade ties with world price chains increased productivity and well-being, but at the same as well caused job losses, in particular in manufacturing.

The OECD as well updated its country increase forecasts.

It cut its outlook for US economic increase by three tenths of a point to 2.1 % next a weak initial quarter.