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Here’s What Rich Countries Need to Do to Sustain Global Growth

November 22, 2018, 12:38 PM UTC

Global growth should continue for the next two years, the Organisation for Economic Co-operation and Development (OECD) said Wednesday [full report PDF], but it has revised forecasts down for some richer countries, including Germany, France, and Italy. Signals are mixed, but many forecasters agree that the U.S. is also going to experience weaker growth in the next 12 to 18 months — if not an outright recession.

Global GDP growth may dip from 3.7% this year to 3.5% in 2019 and 2020, the OECD predicts. While slowing growth is a natural part of any economic cycle, the OECD says that trade tensions between the U.S. and China have made things worse. It also warns that Brexit has contributed to uncertainty in Europe.

Instead, the OECD urges “policymakers to restore confidence in international dialogue and institutions”. It also repeated previous calls for the completion of the European Monetary Union.

In addition to its focus on building better bridges between countries, this semester’s forecast had a special focus on ways that workers can themselves gain from economic growth.

“Shoring up the global economy also involves responding to people’s concerns about the lack of improvements in wages, living standards and opportunities,” OECD chief economist Laurence Boon said in a statement. “Promoting competition to improve business dynamics can help by increasing workers’ bargaining position.”

So can better education of workers and promoting their movement among different companies. Silicon Valley giants, for example, colluded to keep their workers wages low until a federal judge ordered them to compensate workers for it. Now, they are pursuing other means of coercing their employees into docility.

In the meantime, emerging markets such as Indonesia are growing at 5%, China is growing around 6%, and India around 7%. If rich countries are going to stop dragging down the global average, they may have to learn to loosen up, reduce the power of corporate monopolies, lower barriers to entry, and return economic gains to workers and consumers, The Economist wrote last week.