Bloomberg Businessweek Europe - November 04, 2019

68

Bloomberg Businessweek ○ The New Economy November 4, 2019

Blueprint

Prospects for growth are fading across much of the world. Here’s Bloomberg

Economics’ five best ideas for giving some major economies a shot in the arm.

Unleash Indonesia’s Animal Spirits

President Joko Widodo has pledged to build out

infrastructure, develop human capital, and ease foreign

investment limits. If he delivers, growth could rise by

1 to 2 percentage points over the next decade—significant

for an economy that expanded 5.2% in 2018.

Untangle Brazil’s Tax Web

Brazilian companies spend four times as long preparing

their taxes as their Latin American peers. An overhaul of

the Byzantine tax code, now under debate in Congress,

could boost gross domestic product by 10% within

15  years, according to the Center for Fiscal Citizenship.

Put More Women to Work in Japan and Korea

Japanese women do more than five times as much housework as men. In South Korea it’s over four times as much. Getting

more women into the labor market, and monetizing a larger share of unpaid housework, would deliver a double boost to

growth. In Japan unpaid domestic work is worth about 25% of GDP, according to the Cabinet Office.

Turn Saudi Oil Into Growth Gold

Proceeds from a partial privatization of Saudi Aramco

could help improve Saudi Arabia’s dismal productivity

performance if invested wisely (no wasteful public

works, no raises for overpaid civil servants). That could

almost double GDP growth, to more than 4%, and cut

the unemployment rate to single digits.

Reform Italy’s Labor Market

Reducing Italy’s natural rate of unemployment (i.e.,

the level that does not spark inflation) to 7%, from its

estimated level of 9.2%, would lift potential growth by

more than 1 percentage point. The country needs to

align wages with productivity, lower taxes on labor,

and make dismissals easier.

SOURCES: WORLD BANK; THE CONFERENCE BOARD; BLOOMBERG ECONOMICS; OECD

0 10% 20% 30%

Gender pay gap in OECD nations Europe Asia Americas Oceania

Japan South Korea

Canada

Luxembourg

Italy

France U.K.

Germany

Average

U.S.

Indonesia’s ranking in the World Bank’s

ease of doing business index (1 to 190)

France

Spain

Euro area

Percentage-point change in natural rate

of unemployment since Q4 2012

Total tax contribution rate (percent of profit)

Argentina

China

Mexico

Chile

Bolivia

Brazil

0

50

100%

0 Hours per year spent filing taxes 2k

Output per worker (index, 2000 = 100)

Saudi Arabia World^160

100

80

2006

131st

2018

72nd

2000 2019

–0.5

–1.2

–1.1

Germany –2.1

0.4 Italy

Bloomberg

Businessweek

(USPS

080

900)

November

4, 2019

(ISSN

0007-7135)

H Issue

no.

4635

Published

weekly,

except

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April,

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68

BloombergBusinessweek ○TheNewEconomy November 4, 2019

Blueprint

Prospects for growth are fading across much of the world. Here’s Bloomberg

Economics’ five best ideas for giving some major economies a shot in the arm.

UnleashIndonesia’sAnimalSpirits

PresidentJokoWidodohaspledgedtobuildout

infrastructure,develophumancapital,andeaseforeign

investmentlimits.If hedelivers,growthcouldriseby

1 to2 percentagepointsoverthenextdecade—significant

foraneconomythatexpanded5.2%in2018.

Untangle Brazil’s Tax Web

Brazilian companies spend four times as long preparing

their taxes as their Latin American peers. An overhaul of

the Byzantine tax code, now under debate in Congress,

could boost gross domestic product by 10% within

15 years,accordingtotheCenterforFiscalCitizenship.

Put More Women to Work in Japan and Korea

Japanese women do more than five times as much housework as men. In South Korea it’s over four times as much. Getting

more women into the labor market, and monetizing a larger share of unpaid housework, would deliver a double boost to

growth.InJapanunpaiddomesticworkis worthabout25%ofGDP,accordingtothe Cabinet Office.

Turn Saudi Oil Into Growth Gold

Proceeds from a partial privatization of Saudi Aramco

could help improve Saudi Arabia’s dismal productivity

performance if invested wisely (no wasteful public

works, no raises for overpaid civil servants). That could

almost double GDP growth, to more than 4%, and cut

theunemploymentratetosingledigits.

ReformItaly’sLaborMarket

ReducingItaly’snaturalrateofunemployment(i.e.,

thelevelthatdoesnotsparkinflation)to7%,fromits

estimatedlevelof9.2%,wouldliftpotentialgrowthby

morethan1 percentagepoint.Thecountryneedsto

alignwageswithproductivity,lowertaxesonlabor,

andmakedismissalseasier.

SOURCES:WORLDBANK;THECONFERENCEBOARD;BLOOMBERGECONOMICS;OECD

0 10% 20% 30%

Gender pay gap in OECD nations Europe Asia Americas Oceania

Japan South Korea

Canada

Luxembourg

Italy

France U.K.

Germany

Average

U.S.

Indonesia’srankingintheWorldBank’s

easeofdoingbusinessindex(1 to190)

France

Spain

Euroarea

Percentage-pointchangeinnaturalrate

ofunemploymentsinceQ4 2012

Totaltaxcontributionrate(percentofprofit)

Argentina

China

Mexico

Chile

Bolivia

Brazil

0

50

100%

0 Hoursperyearspentfilingtaxes 2k

Outputperworker(index, 2000 =100)

SaudiArabia World^160

100

80

2006

131st

2018

72nd

2000 2019

–0.5

–1.2

–1.1

Germany –2.1

0.4 Italy

Bloomberg

Businessweek

(USPS

080

900)

November

4,

2019

(ISSN

0007-7135)

H

Issue

no.

4635

Published

weekly,

except

one

week

in

February,

April,

June,

July,

September,

October

and

two

weeks

in

December

by

Bloomberg

L.P.

Periodicals

postage

paid

at

New

York,

N.Y.,

and

at

additional

mailing

offices.

Executive,

Editorial,

Circulation,

and

Advertising

Offices:

Bloomberg

Businessweek,

731

Lexington

Avenue,

New

York,

NY

10022.

POSTMASTER:

Send

address

changes

to

Bloomberg

Businessweek,

P.O.

Box

37528,

Boone,

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50037-0528.

Canada

Post

Publication

Mail

Agreement

Number

41989020.

Return

undeliverable

Canadian

addresses

to

DHL

Global

Mail,

355

Admiral

Blvd.,

Unit

4,

Mississauga, ON L5T 2N1. Email: [email protected]. QST#1008327064. Registered for GST as Bloomberg L.P. GST #12829 9898 RT0001. Copyright 2019 Bloomberg L.P. All rights reserved. Title registered in the U.S. Patent Office. Single Copy Sales: Call 800 298-9867 or email: [email protected]. Educational Permissions: Copyright Clearance Center at [email protected]. Printed in the U.S.A. CPPAP NUMBER 0414N68830