G20 Economies Should Target Reforms to Boost Medium-Term Growth Prospects
IMF Blog, November 21, 2024
Source details
- Canonical URL
- G20 Economies Should Target Reforms to Boost Medium-Term Growth Prospects
Other formats
Bibliographic details
- Authors: Paula Beltran Saavedra, Nicolas Fernandez-Arias, Chanpheng Fizzarotti, Alberto Musso
- Published: November 21, 2024
Overview and key challenge
- Publication date: November 21, 2024.
- Authors: Paula Beltran Saavedra, Nicolas Fernandez-Arias, Chanpheng Fizzarotti, Alberto Musso.
- Main finding: For most Group of Twenty economies, growth is poised to weaken over the next five years and remain well below what was typical in the two decades before the pandemic.
- Coverage: The G20 accounts for about 85 percent of global gross domestic product.
- Note on the African Union: Growth is more robust across the African Union, which joined the G20 last year, but booming populations mean those economies also must create jobs for millions of young people entering the labor market.
Drivers of weak medium-term growth
- Subdued productivity growth, reinforced in some countries by adverse demographic trends, holds back potential growth (as detailed in Chapter 3 of the April 2024 World Economic Outlook).
- Sustainable growth is imperiled by elevated public debt.
- Increased geoeconomic fragmentation and protectionism are additional headwinds.
Priority reform areas (findings and recommendations)
- Fiscal policy frameworks
- The biggest priority across countries in these groups is reforming fiscal policy frameworks to aid lasting consolidation of government budgets.
- Specific guidance:
- Most G20 advanced economies and several EU economies would benefit from tighter public spending limits.
- For most G20 emerging market and developing economies reforms to boost government revenues should be prioritized.
- Several African Union countries could benefit from enhanced fiscal transparency.
- Education and skills
- Improve the quality of education and skill training to better match skills with job opportunities.
- Green transition and energy
- Reforms to accelerate the energy transition are essential, including:
- improving renewable energy capacity,
- enhancing the carbon tax efficacy,
- phasing out fossil fuel subsidies.
- Governance (African Union emphasis)
- In several African Union economies, governance reforms are urgently needed to strengthen the rule of law, fight corruption and improve public finance management.
Reform sequencing and payoffs
- The analysis indicates that payoffs from structural reforms are greatest when they are carefully sequenced and reflect social consensus.
- Implementing priority reforms can significantly boost prospects for growth over the next five years, or medium term, as outlined in the report to the G20.
IMF Blog: “G20 Economies Should Target Reforms to Boost Medium-Term Growth Prospects” (November 21, 2024).
Content in this bundle
- G20 Report on Strong, Sustainable, Balanced, and Inclusive Growth