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OECD predicts slower growth

July 2, 2014

The Organization for Economic Cooperation and Development (OECD) expects slower global growth in the decades ahead. It blames ageing Western populations and lagging productivity in emerging economies for the slowdown.

Indonesien Autofabrik 2014
Image: Bay Ismoyo/AFP/Getty Images

Global gross domestic product (GDP) was expected to slow to an average annual rate of just 2.4 percent between 2050 and 2060, the Organization for Economic Cooperation and Development (OECD) said in a new report released Wednesday.

The projected growth rate would be significantly lower than global GDP expansion between 2010 and 2020, which was estimated to reach 3.6 percent on average, said the organization, which represents the world's most advanced economies, said.

In its long-term growth projection, OECD attributed the slowdown to the dwindling and ageing populations in advanced economies as well as to a decline in the rapid pace of economic expansion in emerging economies. Moreover, climate change could have adverse effects, the Paris-based organization said, reducing global GDP expansion by about 1.5 percent.

Call for higher productivity

In its report, the OECD also called on governments in the developing world to do more to enhance labor productivity in so-called emerging nations.

"Boosting productivity will be the key to boosting growth," OECD Secretary General Angel Gurria said during a press conference in Paris.

Recent trends had shown that many of what he called middle-income countries were not growing fast enough to reach the average income level in the 36 OECD member states by 2050.

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OECD measures labor productivity as national gross domestic product divided by the number of people employed.

According to the most recent statistics, average productivity in the organization as a whole is $86,000 (63,000 euros). This compares unfavorably with the $21,600 per worker generated in the BRICS countries, which include Brazil, Russia, India, China and South Africa.

In order to counteract sluggish growth rates, middle-income countries should put emphasis on economic diversification into high value-added sectors and support consistent regulation, Gurria said. There was room for growth in the service sectors, he added, and a need for middle-income countries to expand technological know-how.

uhe/ipj (dpa, Reuters)