Deputy Managing Director Nigel Clarke of the International Monetary Fund (IMF) addressed the China Development Forum in Beijing, discussing the need for productivity reforms to reinvigorate global growth. Clarke highlighted the current global economic landscape, noting that "patterns of trade and capital flows are shifting" and that artificial intelligence is rapidly advancing.
Clarke pointed out that despite steady global growth, it remains underwhelming with a five-year ahead forecast of 3.1 percent, which is below the pre-pandemic average. He attributed this to declining productivity growth since the 2008-09 financial crisis.
The focus of his remarks was on reviving medium-term growth through structural reforms aimed at increasing productivity. Clarke emphasized that "in ageing societies—where the share of the working-age population is shrinking—productivity growth has a vital role to play in maintaining living standards." He also noted its importance for emerging markets and developing economies seeking to close gaps with wealthier nations.
Clarke identified two priorities for Asia: innovation and better resource allocation. He explained that investments in research and development could drive technological advances necessary for long-term growth. He cited IMF research indicating that boosting public research expenditure by a third and doubling subsidies to private research could significantly increase productivity growth.
Furthermore, Clarke discussed how reallocating resources toward more productive firms and industries can enhance overall productivity. This includes policies aimed at increasing worker mobility and strengthening market forces.
He praised Asia's historical success in moving from agriculture to manufacturing but stressed the need for continued reforms, such as expanding the services sector, which he described as "a potentially important new source of growth."
In particular, Clarke suggested that reallocating resources to services in China could boost consumption—a priority for the Chinese government—as household consumption as a share of GDP remains low compared to OECD countries.
Clarke concluded by highlighting the IMF's support through policy advice, lending, capacity development, and its newly formed Advisory Council on Entrepreneurship and Growth. The council aims to provide ideas on easing regulatory barriers and adapting tax systems to foster innovation-friendly environments.