OECD says coronavirus is another reason to boost fiscal stimulus

The coronavirus outbreak presents another reason for nations with fiscal surpluses to boost their spending and support the global economy, the head of the Organisation for Economic Cooperation and Development (OECD) said.

“It’s a call to arms,” Angel Gurria, secretary general of the OECD, said in an interview with Bloomberg TV in Saudi Arabia.

“Look at what’s going on. Already we were in a slowdown, we had trade tensions, investment was suffering. And now we have the coronavirus.”

He was doubtful that such nations – none of which he named – have yet been convinced that they should boost their infrastructure and other spending.

“We’re not doing a very good job in terms of transmitting this requirement,” he said from Riyadh, where he’s attending meetings for the Group of 20 nations.

The guardians of the world economy are convening amid mounting fears that the virus outbreak poses a greater threat to global growth than envisaged just a few weeks ago.

While the first phase of a trade deal between the US and China late last year was welcomed, disputes over commerce are still too common, Gurria said.

“Trade tensions have already cost us more than 1 per cent of the growth of the world,” he said. “Let’s bring them down. What about the cars, the uncertainty about European cars being exported to the US?”

Major economies are unified in the belief that there should be a multilateral deal on taxing the digital economy, he said.

Treasury Secretary Steven Mnuchin personally assured the OECD in a letter in December that the US backed the idea, while talks in Riyadh have made progress, he said.

“There was a reaffirmation,” he said. “The world is all moving – 137 countries are moving into the design, details and numbers, the mechanics of a way in which we can tax the digital economy of the world.”