Productivity and long term growth
The Long Game: Fiscal Outlooks to 2060 Underline Need for Structural Reform
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This policy paper updates the long-term scenarios to 2060 last published in July 2018, with a special focus on fiscal sustainability and risks. In a baseline economic and fiscal scenario, trend real GDP growth for the OECD + G20 area declines from around 3% post-COVID to 1½ per cent in 2060, mainly due to a deceleration of large emerging-market economies. Meanwhile, secular trends such as population ageing and the rising relative price of services will keep adding pressure on government budgets. Without policy changes, maintaining current public service standards and benefits while keeping public debt ratios stable at current levels would increase fiscal pressure in the median OECD country by nearly 8 percentage points of GDP between 2021 and 2060, and much more in some countries. Policy scenarios show that reforms to labour market and retirement policies could help boost living standards and alleviate future fiscal pressures. An ambitious reform package combining labour market reforms to raise employment rates with reforms to eliminate early retirement pathways and keep effective retirement ages rising by two thirds of future gains in life expectancy could halve the projected increase in fiscal pressure in the median country, even after taking into account future spending pressures associated with ageing.
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The following papers present previous versions of long-run scenarios:
- Guillemette, Y. and D. Turner (2018), "The Long View: Scenarios for the World Economy to 2060", OECD Economic Policy Papers, No. 22, OECD Publishing, Paris.
- OECD (2014), “Growth Prospects and Fiscal Requirements over the Long Term”, in OECD Economic Outlook, Volume 2014 Issue 1, OECD Publishing, Paris.
- Johansson Å. et al. (2013), “Long-Term Growth Scenarios”, OECD Economics Department Working Papers, No. 1000, OECD Publishing, Paris.
- The following are background papers with methodological details on the long-term global model:
- Guillemette, Y. (2019), “Recent improvements to the public finance block of the OECD’s long-term global model”, OECD Economics Department Working Papers, No. 1581, OECD Publishing, Paris.
- Guillemette, Y., A. de Mauro and D. Turner (2018), “Saving, Investment, Capital Stock and Current Account Projections in Long-Term Scenarios”, OECD Economics Department Working Papers, No. 1461, OECD Publishing, Paris.
- Guillemette, Y. and D. Turner (2017), “The fiscal projection framework in long-term scenarios”, OECD Economics Department Working Papers, No. 1440, OECD Publishing, Paris.
- Guillemette, Y. et al. (2017), “A revised approach to productivity convergence in long-term scenarios”, OECD Economics Department Working Papers, No. 1385, OECD Publishing, Paris.
- Cavalleri, M. and Y. Guillemette (2017), “A revised approach to trend employment projections in long-term scenarios”, OECD Economics Department Working Papers, No. 1384, OECD Publishing, Paris.
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