The OECD has released a report calling for governments to continue their fiscal stimulus programs. The organization believes that withdrawing support too early could derail the nascent economic recovery. The report emphasizes the importance of sustained government spending to bolster demand and create jobs.

Key Recommendations

• Maintain fiscal stimulus until a sustainable recovery is underway.
• Focus on investments that boost long-term growth potential.
• Coordinate fiscal policies internationally to maximize impact.

Risks of Premature Withdrawal

The OECD warns that withdrawing fiscal stimulus too soon could have serious consequences, including:

• A relapse into recession.
• Increased unemployment.
• Deflationary pressures.

The organization acknowledges the need for fiscal consolidation in the long term but argues that now is not the time to cut spending. Instead, governments should focus on implementing structural reforms to improve competitiveness and productivity.