Page 17 - Policy Economic Report -August 2026

POLICY AND ECONOMIC
OIL & GAS MARKET

Figure 7: Flash PMI Output Indicators for G4 developed economies (US, Eurozone, UK and Japan)

Source: S&P Global PMI

2. Well-designed regulatory and institutional reforms can boost economic growth – IMF

Structural weaknesses in labor markets, product markets and institutional frameworks continue to
constrain growth potential across many G20 economies. A recent assessment by the International
Monetary Fund (IMF) highlights how excessive regulation, barriers to competition and weaknesses in
institutional quality can reduce productivity, discourage investment and limit the ability of economies to
adapt to technological and structural change. The analysis draws on a new IMF survey examining
regulatory and institutional constraints across G20 economies.

The IMF's assessment points to significant differences in regulatory environments across economies.
While regulation is important for protecting consumers, workers and market stability, excessive or poorly
designed regulations can raise compliance costs, discourage firm entry and expansion, and reduce
competitive pressures. In product markets, unnecessary barriers can restrict business dynamism and
innovation, while rigid labor-market arrangements can constrain employment creation and the efficient
movement of workers towards expanding sectors. Institutional weaknesses can further amplify these
effects by increasing uncertainty and reducing investor confidence.

The report identifies labor-market reforms, product-market reforms and improvements in governance as
particularly important areas for raising long-term growth. Reforms that facilitate business entry, reduce
unnecessary administrative burdens and strengthen competition can improve productivity by allowing
resources to move towards more productive firms and sectors. Similarly, labour-market reforms that
expand participation, improve skills and facilitate worker mobility can increase both employment and
productivity. Stronger governance and institutional quality can complement these reforms by improving
policy predictability, reducing uncertainty and strengthening the effectiveness of public institutions.

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