Economic Policy Reforms 2023
Going for Growth
Identifying country-specific reform priorities
The past years have been dominated by shocks and crises that have profoundly changed societies and economies. GDP growth is projected to remain below trend in both 2023 and 2024, although it will gradually pick up through 2024 as inflation moderates and real incomes strengthen. Going for Growth 2023 outlines structural reform priorities for OECD and partner countries that can help set long-term growth on a stronger and more sustainable path.
- Key findings:
- Potential growth is weak and requires supply-side reforms
- Comprehensive policy action is needed to put emissions on a downward path
- Tackling gender inequality can help remedy current labour market tightness
Potential growth is weak and requires supply-side reforms
Global GDP growth prospects in 2023 and 2024 are lackluster and the outlook for medium-term growth remains weak. Reviving potential growth and improving the quality of economic growth will require governments to undertake ambitious supply-boosting structural reforms.
Comprehensive policy action is needed to put emissions on a downward path
While most OECD countries have set ambitious climate targets, policies currently in place are likely to be insufficient to put greenhouse gas emissions on a downward path before 2030, making the goal of net-zero emissions by mid-century challenging to attain. Reaching decarbonisation by mid-century will require structural changes across the economy, notably through substantial reallocation of workers and capital from emission-intensive activities towards greener activities.
Tackling gender inequality can help remedy current labour market tightness
While progress has been made, the employment rate for women still lags that of men, and gender pay gaps remain prominent across many OECD countries. Gender gaps in labour market participation can often be traced back to barriers or incentives related to the provision of childcare and parental leave, as well as the design of tax and benefit systems. Addressing such barriers can not only boost gender equality, but also provide a remedy to the current labour markets tightness and widespread labour shortages.
What should governments do?
The current weakness of potential growth can partly be traced back to low investments and capital accumulation. Public policies that ensure a competitive environment, facilitate market entry and ease regulatory burdens on businesses can bolster firms’ incentives to invest and upgrade technologies. Firms also need employees with the right skills set. Policies play a crucial role in enhancing the productivity benefits for workers and managers by improving education outcomes, promoting skill upgrade, and facilitating productive matches of workers to jobs.
Governments should combine pricing, regulations and investments to effectively reduce emissions. Pricing mechanisms can be enhanced by expanding coverage and making prices uniform across sectors and energy sources. In parallel, both private and public investments in clean energy need to accelerate, while regulations and standards should encourage emission reduction.
Digital technologies have the potential to boost productivity, yet the diffusion of digital tools lags in many OECD countries. Policies should ensure access by businesses and households to a broadband connection, equip workers with the needed skills to thrive in a digital economy, and create the appropriate policy environment to support digital innovation.
