{
  "title": "Getting into Higher Gear: Why Structural Reforms Are Critical for Revving Up Global Growth",
  "publication": "IMF Blog, July 25, 2016",
  "sourceUrl": "https://www.imf.org/en/blogs/articles/2016/07/25/getting-into-higher-gear-why-structural-reforms-are-critical-for-revving-up-global-growth",
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  "summary": "Author: David Lipton",
  "sections": [
    {
      "heading": "Overview and context",
      "content": "- Author: David Lipton  \n- Date: July 25, 2016\n- Core point: Almost a decade after the start of the global financial crisis, the world economy has not achieved escape velocity.\n- IMF forecast highlighted in the piece:\n  - Global growth of 3.1 percent in 2016\n  - Global growth of 3.4 percent in 2017\n- Main challenge cited: increased economic and political uncertainty, including from the impact of the Brexit vote.\n- Policymakers have used fiscal stimulus and appropriately accommodative monetary policy, but a lasting recovery remains elusive.\n- Central argument: The world’s largest economies need more structural reform to boost productivity and revive growth; this theme was emphasized at recent G-20 meetings."
    },
    {
      "heading": "Guiding Framework for Structural Reforms (three key considerations)",
      "content": "- Consideration 1 — Level of development:\n  - In advanced economies: reforms that foster innovation are likely to yield the greatest productivity pay-off.\n  - In emerging markets: reforms that improve the way markets function are likely to matter more.\n- Consideration 2 — Position in the business cycle:\n  - The weaker the economy, the more important it is to choose reforms that support both short-term and long-term growth.\n  - Example: Infrastructure investment boosts growth today through investment and job creation and boosts future growth by improving productive capacity.\n  - Note on labor market deregulation: In good times it can increase hiring; in poor outlooks it can lead to short-term job losses because layoffs become easier.\n- Consideration 3 — Macroeconomic policy space:\n  - Demand support can be critical to enhance the impact of structural reforms and to offset possible short-term costs of supply measures (e.g., support for those who become unemployed because of deregulation).\n  - Structural reforms can also help increase macroeconomic policy space:\n    - Labor and product market reforms that increase competition and lower prices can create space for monetary easing.\n    - Reforms that boost medium-term growth increase tax revenue, which—together with higher output—will lower the ratio of public debt to GDP over time and increase fiscal space today."
    },
    {
      "heading": "IMF policy focus and country-level recommendations",
      "content": "- Advanced economies:\n  - Emphasis on measures that raise both short- and medium-term growth.\n  - Specific recommendations include:\n    - Increase public spending on infrastructure investment in Australia, Canada, and Germany.\n    - Reforms to broaden full-time employment opportunities for women in Canada, Germany, Japan, Korea, the UK, and the US.\n    - Where policy space is limited (example: Italy), recommend product market deregulation to raise investment, employment, and output without short-run budgetary costs.\n    - Tax simplification and broadening measures in the U.S. can reduce inefficiencies and generate revenues to finance other high pay-off (but costly) reforms.\n- Emerging markets:\n  - Focus on reforms that can deliver near-term payoffs given weaker conditions and limited fiscal space.\n  - Specific recommendations include:\n    - Better management of public investment processes in India.\n    - Product market reforms in China.\n    - Labor market reforms in South Africa.\n    - Address trade and FDI impediments in Brazil, India, and Indonesia.\n    - Governance of public institutions and other institutional reforms.\n  - Where fiscal space is limited or consolidation is necessary, encourage adjusting the composition of fiscal policy to make it more growth-friendly."
    },
    {
      "heading": "Policy implementation and synergies",
      "content": "- G-20 members are making new structural reform commitments ahead of the Hangzhou Summit.\n- To maximize impact:\n  - Implement reforms as part of a comprehensive policy package with demand and supply policies complementing each other.\n  - Support reforms with policies that cushion those who may suffer short-term costs.\n  - Ensure reforms deliver inclusive benefits so they \"need to benefit not just some, but all.\"\n\nDavid Lipton, July 25, 2016\n\n---\n\n Content in this bundle\n\n- Staff Note for the G 20—A Guiding Framework for Structural Reforms; IMF Policy paper; March 31, 2016\n  - Staff Note for the G 20—A Guiding Framework for Structural Reforms; IMF Policy paper; March 31, 2016 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Staff Note for the G 20—A Guiding Framework for Structural Reforms; IMF Policy paper; March 31, 2016 (PDF){rel=\"external\" type=\"application/pdf\"}\n- 072216a — Executive Summary\n  - 072216a — Executive Summary (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - 072216a — Executive Summary (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- عربي\n- forecast\n- April 2016 World Economic Outlook\n- structural reforms\n\nSource: https://www.imf.org/en/blogs/articles/2016/07/25/getting-into-higher-gear-why-structural-reforms-are-critical-for-revving-up-global-growth"
    }
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    "Authors: David Lipton",
    "Published: July 25, 2016",
    "Author: David Lipton",
    "Date: July 25, 2016",
    "Core point: Almost a decade after the start of the global financial crisis, the world economy has not achieved escape velocity.",
    "IMF forecast highlighted in the piece:",
    "Main challenge cited: increased economic and political uncertainty, including from the impact of the Brexit vote.",
    "Policymakers have used fiscal stimulus and appropriately accommodative monetary policy, but a lasting recovery remains elusive.",
    "Central argument: The world’s largest economies need more structural reform to boost productivity and revive growth; this theme was emphasized at recent G-20 meetings.",
    "Consideration 1 — Level of development:",
    "Consideration 2 — Position in the business cycle:",
    "Consideration 3 — Macroeconomic policy space:",
    "Advanced economies:",
    "Emerging markets:",
    "G-20 members are making new structural reform commitments ahead of the Hangzhou Summit.",
    "To maximize impact:",
    "**Staff Note for the G 20—A Guiding Framework for Structural Reforms; IMF Policy paper; March 31, 2016**",
    "**072216a — Executive Summary**",
    "[عربي](http://blog-montada.imf.org/?p=4418)",
    "[forecast](http://www.imf.org/en/News/Articles/2016/07/18/18/11/NA07192016-IMF-Cuts-Global-Growth-Forecasts-on-Brexit-Warns-of-Risks-to-Outlook)",
    "[April 2016 World Economic Outlook](http://www.imf.org/en/news/articles/2015/09/28/04/53/sores040616a)",
    "[structural reforms](http://www.imf.org/en/news/articles/2015/09/28/04/53/sopol110915a)"
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