The International Monetary Fund (IMF) has warned that excessive regulation and weak institutions could hold back economic growth across G20 economies, as the group faces increasingly weak medium-term prospects. The warning comes as the IMF projects annual growth of just three per cent for the G20 by 2031, a level close to the group’s weakest performance since the global financial crisis.
The G20, which accounts for about 85 per cent of global economic output, has managed to withstand another difficult year marked by rising energy prices, policy uncertainty and increased protectionism. However, the IMF said this resilience should not distract from deeper structural problems that could limit investment, productivity and long-term growth.
In its 2026 G20 Report on Strong, Sustainable, Balanced, and Inclusive Growth, the Fund said poorly designed regulations can create more problems than they solve. An IMF survey found that about half of advanced G20 economies and three-quarters of emerging-market members face constraints linked to labour-market, product-market or consumer-protection regulations. The Fund stressed that the answer is not simply to remove regulations, but to make them more effective and properly targeted.
The challenges also differ across economies. Advanced G20 countries are facing issues such as ageing populations, housing restrictions and land-use policies, while emerging markets continue to struggle with underdeveloped capital markets, weak public investment management, governance gaps and institutional weaknesses. The IMF added that regulatory differences within jurisdictions, including licensing and financial-market barriers in the European Union, can also restrict the movement of workers, capital, goods and services.
The Fund said well-designed reforms could unlock investment and improve growth, but political resistance remains a major obstacle in many G20 economies. It recommended stronger institutions, clearer communication with stakeholders and gradual implementation of reforms, alongside retraining and reskilling programmes to reduce their impact on affected workers. Ultimately, the IMF’s message is straightforward: G20 economies do not necessarily need fewer rules—they need better rules and stronger institutions to turn resilience into sustainable growth.
source: The guardian
