They also emphasised the importance of addressing underlying tensions and risks, notably in relation to international and domestic imbalances, which threaten the continuing global expansion.
International co-operation and policy co-ordination were considered to be necessary in order to achieve an orderly unwinding of imbalances. The OECD and other multilateral organisations could play a very important role in this.
Second, taking a longer-term view, ministers stressed that the pace of structural reform needed to be stepped up in those OECD countries that over the years have tended to fall behind the best performers, and discussed reform priorities and modalities. Learning from best practices and continuous exchange of information on how to broaden the ownership of the reform agenda and how to extend the discussion on short-term costs versus long-term benefits would be essential in implementing reforms.
Ministers stressed the importance of open markets and the compelling need for a swift conclusion of the Doha trade round. […]
Ministers from non-OECD economies participated in most of the discussions, and the dialogue was mutually enriching. Ministers also benefited from an exchange of views with the Business and Industry and the Trade Union Advisory Committees to the OECD, as well as with civil society more broadly in the context of the OECD Forum. […]
Ministers expected the buoyant pace of world growth witnessed over the past few years to be sustained in the near future. Against the backdrop of continuing rapid growth in the emerging economies, notably in Asia, the expansion in the OECD area would proceed apace, with activity broadly at potential in the US and Japan and catching up gradually in Europe. Ministers considered that inflation was likely to remain under control, despite shrinking spare capacity and higher commodity prices, because heightened international competition would help contain prices. They saw unemployment staying low in North America and Japan, and declining in a number of European countries, albeit slowly.
Turning to risks, ministers welcomed the fact that rising energy prices had not thrown the global expansion off course, but expressed concern about the likely impact of any further increases. They recognised the importance of enhancing energy security through improvement of energy efficiency and further investment across the supply chain. Ministers noted that benign financial conditions had supported demand so far but that this might not last: interest rates were now rising, in a context where valuations in some asset markets seemed stretched. The third risk ministers highlighted related to widening current account gaps, partly reflecting domestic imbalances. Ministers underlined that timely policy action–both macroeconomic and structural–was required to reverse this trend and to facilitate a smooth unwinding of the imbalances.
Ministers further agreed on the paramount importance of prudent fiscal policies”. […]
* This is an extract. In the complete “Chair’s summary” (see reference below), Prime Minister Karamanlis goes on to outline a number of themes discussed at the ministerial council meeting: Ensuring economic stability and improving economic performance, particularly longer-term challenges such as the divergences in growth rates among member countries; Implementing economic reforms for growth and employment; the OECD Initiative on Investment for Development, in particular, the Policy Guidance for Donors for Using ODA to Promote Private Investment, and the Policy Framework for Investment (PFI); Intellectual assets and value Creation; and the growing impact that major emerging economies are having on the global economy, and implications for OECD work.
The chair’s summary then outlines remarks to the meeting by Pascal Lamy, director-general of the WTO, on the status of trade negotiations on the Doha Development Agenda. A successful conclusion of the round would provide a major boost for the world economy, including developing countries, the summary notes, but deadlines should not be postponed further.
Mr Karamanlis ended on the issue of OECD governance and enlargement, reporting that ministers at the meeting welcomed the Council resolution on a new governance structure for the organisation which entered into force on 1 June 2006. The OECD should expand its global reach and policy impact through an enlarged membership and enhanced engagement with important non-OECD economies, ministers agreed, and they welcomed the Council decision to establish by July 2006 a mechanism to identify countries for potential accession and countries for enhanced engagement with the OECD.
In conclusion, the summary notes that OECD ministers thanked the outgoing secretary-general, Donald J. Johnston, for his strong leadership and outstanding dedication over the past ten years, and they welcomed Angel Gurría as his successor. Mr Gurría took up his post on 1 June 2006.
The complete 2,000-word “Chair’s summary”, together with press statements and other reading, can be found at www.oecd.org/mcm2006.
©OECD Observer No 256, July 2006