PARIS: Growth is projected to almost halve in developed and big emerging market economies in the coming decades, requiring higher taxes to keep debt from rocketing, the OECD forecast on Thursday in an update of its long-term economic projections.

While speeding up the switch to cleaner energy could further weigh on activity, effective carbon pricing schemes could yield windfall revenues for some governments, the Organisation for Economic Cooperation and Development (OECD) said.

Trend growth in the 38 OECD members and G20 countries was projected to gradually slow from pre-COVID levels of 3% to 1.7% by 2060 as many countries’ workforces shrink due to ageing and labour efficiency growth slows in emerging market countries.

While OECD members’ trend growth rate was seen slowing from 1.8% to 1.3% in 2060, G20 emerging market economies were expected to see a bigger slowdown, from 4.5% to 2% by 2060.

While India was expected to overtake China as a bigger contributor to global growth by the late 2030s, the Chinese economy was projected to be the single biggest economy throughout the forecast period.

As growth slows, so will the pressure on government finances, which in the case of OECD countries would mean taxes needing to be raised on average by over six percentage points by 2060 to keep debt at current levels.