The Organization for Economic Cooperation and Development (OECD) called for Monday better using expansionary fiscal initiatives and maintaining trade openness to push the global economy out of today's low-growth trap.
"In light of the current context of low interest rates, policymakers have a unique window of opportunity to make more active use of fiscal levers to boost growth and reduce inequality without compromising debt levels," Secretary-General of OECD Angel Gurria said Monday, while launching the latest version of report named "Global Economic Outlook", adding that "we urge them to do so."
The OECD said in the report that the ongoing or projected shift in the fiscal stance in a number of major economies including the United States, accounts for much of the modest increase in global growth to 3.3 percent in 2017 and 3.6 percent in 2018. But "this is not a blank cheque for governments," Gurria said, noting that "the OECD is calling for fiscal policy to be used more wisely, with spending targeted at areas that boost growth, like high-quality infrastructure investment, innovation, education and skills, which also make growth more inclusive."
In the report, the OECD also identified a number of financial risks where exchange rate and capital flow volatility coupled with pricing distortions are exposing the vulnerability of corporate balance sheets, particularly in emerging markets, and challenging bank profitability and the long-term stability of pension schemes in advanced economies.
The international organization also said that an increase in protectionism could risk impairing already weak growth in global trade.
It called in the report on governments to avoid protectionist policies and encourages them instead to implement structural policy packages that create more job opportunities, increase business dynamism and promote successful reallocation, ensuring that the gains from trade are better shared by all.
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