The crisis and beyond
The global economy today is facing difficulties like we have not seen for at least half a century.
A global financial crisis which began with a sub-prime mortgage meltdown has already had profound repercussions on economies around the world, with the contraction in industrial output, trade volumes and foreign investment becoming increasingly pronounced worldwide. Unemployment rates stand at high levels in many countries, with some in double digits.
It is therefore crucial that we swiftly deal with the current financial and economic crisis while, at the same time, preventing it from turning into a social crisis.
Amid such financial, economic and social challenges, the global community has been making every effort to reform the ailing financial system and stimulate the real economy. The recent G20 summit in London played a central role, convening both developed and emerging economies together to come up with concerted actions that could resolve this crisis. In line with these global efforts, the OECD is supporting its members and other countries through analyses and policy dialogue to assist them in overcoming the current economic turbulence and put the world economy back on a long-term growth and development path.
The OECD Ministerial Council Meeting, to be held on 24-25 June, promises to be one of the most critical since the OECD's inception in 1960. It will act as an important link between two major summits, the G20 summit in April and the G8 summit in July. At this critical juncture, ministers from OECD member countries as well as invited ministers from nonmember countries will exchange and identify policy responses, insights and visions for the future under the theme of "The Crisis and Beyond: Building a Stronger, Cleaner and Fairer World Economy". Chaired this year by Korea-a country that acquired some experience by successfully overcoming the Asian crisis only a decade ago-the 2009 focus will be on four specific areas.
First and foremost, ministers will review and outline policy strategies in an effort to find a road to recovery beyond the current economic crisis.
We will discuss systemic failures in regulation, supervision, corporate governance and risk management in the financial sector, as well as stimulus packages to boost the real economy. The meeting will also address competition, innovation and exit policies, and will strive to uncover better ways to move towards a stronger world economy.
Second, socio-economic policy responses are another pillar of the upcoming deliberations.
While growing unemployment is a major cause of concern at the national level, the loss of momentum in reaching the Millennium Development Goals (MDGs) due to the economic crisis is also weighing heavily on the global community. To build a fairer economy, ministers will need to pay particular attention to domestic social issues, including unemployment, risks of social unrest and pressure on pension systems while at the same time continuing to promote global efforts to help developing countries reach the MDGs.
Third, although we are in a critical economic situation today, we must not lose sight of the long-term perspective beyond the current crisis. When designing and implementing economic policies, we should remind ourselves that humankind is facing the most serious environmental challenges of our time, with global warming as the top priority. In fact, a new paradigm for growth and development will be absolutely essential if we are to tackle climate change. It is quite encouraging to see that a "lowcarbon and green growth" policy vision is gaining worldwide support. At the Ministerial Council Meeting, ministers are expected to agree on substantial and practical measures to implement a new vision for a cleaner economy. Finally, for the last three decades, liberalisation in trade and investment-a major vehicle of globalisation-has benefited most of the world, with emerging economies gaining the lion's share. However, world trade is falling this year for the first time in 25 years. During the crisis, policy makers will be more inclined to look towards protectionist measures. Yet we have learned from history that protectionism is the worst policy option during periods of crisis.
At the OECD meeting, we will renew our determination to combat protectionism, in line with the conclusions of the G20, and seek to further reinforce liberalisation in trade and investment. Keeping markets open is the most important and effective way to recover from this crisis and avoid the perils of deglobalisation.
I hope that we will come away from the 2009 OECD Ministerial Council Meeting with a sense of urgency not only concerning the need to revive the world economy but also the importance of revitalising the organisation. Ministers will reconsider the role of the OECD in global policy development and co-operation, and revisit the orientation of OECD activities. The OECD also has to review the way it works in order to increase the relevance and impact of its policy proposals within the policy community and to better serve the public interest. It is important to stress that the OECD will need the political support and guidance of its member countries in order to enhance its visibility and fulfil its raison d'être.
In closing, I would like to underscore once again our commitment to a stronger, cleaner and fairer global economy. I am honoured to be presiding over the OECD Ministerial Council Meeting during one of the most urgent and demanding chapters of our lifetimes and I look forward to working closely with other ministers in order to discharge our mission with both ardour and success.
©OECD Observer No. 273, June 2009
Where are we in the current economic crisis?