In its latest policy paper, the Organisation for Economic Co-operation and Development (OECD) warned that the world is likely to face massive fiscal difficulties in the coming decades, worse than the bloated public debt seen during the Covid-19 pandemic.

Key takeaways

“According to its long-term scenario, a deceleration in large emerging economies, demographic change and slowing productivity gains will drag trend economic growth among the OECD’s 38 members and the Group-of-20 nations to 1.5% in 2060 from around 3% currently. “

“At the same time, states will face rising costs, particularly from pensions and health care.”

“To maintain public services and benefits while stabilizing debt in that environment, governments would have to raise revenues by nearly 8% of gross domestic product.”

“Secular trends such as population aging and the rising relative price of services will keep adding pressure on government budgets.” 

“Fiscal pressure from these long-run trends dwarf that associated with servicing Covid-legacy public debt.”

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