OECD Warns of New Era of Low Growth

OECD Warns of New Era of Low Growth

‘In several emerging-market economies — notably Brazil, India and Indonesia — infrastructure investment is not sufficient to support high rates of industrialization and urbanization, hampering potential growth.’

By Agence France-Presse on 4:27 pm February 21, 2014.

Sydney. The OECD on Friday warned declining global productivity will usher in a new and extended era of low growth unless there are major structural reforms.

Its new “Going for Growth” report identifies infrastructure shortages and slowing trade activity as key problems — issues that will be in focus at the G20 meeting of finance ministers and central bank governors in Sydney this weekend.

“The widespread deceleration in productivity since the [global financial] crisis could presage the beginning of a new low–growth era,” the Organisation for Economic Cooperation and Development said.

“The global economy’s momentum remains sluggish, heightening concerns that there has been a structural downshift in growth rates compared with pre-crisis levels.

“These concerns, already prevalent among advanced OECD countries for some time, now encompass emerging–market economies and are fuelled also by high unemployment and falling labour force participation in many countries.”

The report calls for investment in skills to boost labour force participation, and a fresh approach to encourage private investment in infrastructure to help boost growth.

“One worrying development is the marked slowdown in global trade activity relative to world production,” it said. “Aside from its fundamental role as a vector of technology and knowledge diffusion, international trade boosts productivity through stronger competition pressures on domestic markets.

“And trade-related concerns are magnified by subdued investment in new plant, machinery and equipment as well as in less tangible assets such as research and development or new business processes and workforce training, which are needed to make the most of new technologies.”

The OECD said that business investment rates in most advanced economies were below what would be needed to sustain higher-trend growth rates.

“In several emerging-market economies — notably Brazil, India and Indonesia — infrastructure investment is not sufficient to support high rates of industrialization and urbanization, hampering potential growth.”

The G20 has sessions on the global economy and growth strategies, both of which have been prioritized by summit chair Australia with Treasurer Joe Hockey this week saying “infrastructure will be a key as we try to boost economic growth and create jobs”.

OECD data released Thursday showed growth in advanced economies slowed down slightly in 2013 to 1.3 percent from 1.5 percent in 2012.

The highest 12-month rate was turned in by Britain with 2.8 percent, followed by Japan and the United States with 2.7 percent.



About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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