The head of the Organization for Economic Co-operation and Development says countries need to come together to tackle threats to multilateralism as trade tensions and an escalation of protectionism threaten global economic growth.
OECD Secretary-General Angel Gurria says multilateralism needs adapt to new economic and financial challenges, including competition and traditional concepts about taxation in light of the digital economy.
In a speech before the start of social policy ministerial meetings in Montreal, Gurria says the goal of reshaping multilateralism is to support sustainable and more inclusive growth.
But he says there is no “rewind button on global integration” since the world is inherently interconnected.
The global economy grew last year by 3.7 per cent, its fastest pace since 2010, and is expected to expand by nearly four per cent this year and next.
Trade and investment have rebounded and employment rates are back to levels before the financial crisis a decade ago.
Yet he says recent trade measures and threats of retaliation, both of which he didn’t identify by country, have begun to affect business confidence and there are signs that growth is being undermined by uncertainty.
Gurria also says wage growth is subdued, especially for low and middle-income workers, with digitalization and globalization mainly benefiting skilled workers.
Soft wage growth won’t check rising inequality, he says.
The average income of the richest 10 per cent is now around 10 times that of the poorest 10 per cent, up from seven times 25 years ago.