Economic crisis:
The long term starts now

Secretary-General of the OECD
Can 2009 bring a ray of light to lift the gloom and end the severest financial and economic crisis in decades?

The OECD Economic Outlook issued end-2008 sees some 21 of 30 member countries already in or heading into a recession that could last a year. Business investment will contract by over 5%, and unemployment could rise by at least 8 million by 2010. This social crisis is affecting families and communities across the planet, with emerging and developing economies suffering too.
Lower global inflation and more affordable energy and food prices offer some relief, but with the economy still in intensive care and public anxiety spreading, the situation could worsen. Restoring growth, stability and confidence must remain the policy priority for months to come.Make no mistake: we need healthy financial markets for our prosperity and development, and to strengthen vital public services. But 2008 reminded us how damaging for our economies badly regulated markets can be.The OECD is working with the world’s governments and other international organisations to stop such failures happening again.Our strategic response, whose details are now online, tackles the crisis in a comprehensive way, by focusing on finance, competition and governance, including their interactions, as well as how to achieve sustainable growth in the real economy. These are exceptional times. They require exceptional responses. Business-as-usual is not an option.The crisis has led to some major new thinking, about regulation and markets, about accountability and ethics, and about the kind of economy we need to build. Our strategy is about devising better policies, better regulations and better institutional frameworks that enable businesses to flourish and public interests to be safeguarded in a stronger, cleaner and fairer world economy.Take financial markets. A range of factors are being addressed to help curtail excessive risk taking and more closely align firm incentives with the interests of shareholders and stakeholders. We are scrutinising such issues as balance-sheet coverage, taxation and restoring market signals. We are evaluating the volatile investment bank segment, its size, capital requirement rules, and other questions. And we are examining broader issues, such as boardroom governance of risk, remuneration and shareholder rights, and how to improve agreed standards, such as OECD Principles of Corporate Governance, regulatory management rules, performance guidelines, and more.Pension funds have taken a battering in recent months, and the OECD strategy will facilitate the search for more appropriate diversification strategies between public and private systems to reduce reliance on risky financial markets.We are also working to improve consumer protection and awareness in using complex financial markets, and boosting ethical standards and international codes of conduct for financial services professionals.One sure protection for consumers is choice, and governments must uphold competition standards for this to happen.Of course, competition is key for a sustainable recovery to take place generally, alongside such fundamentals as keeping markets open for trade and investment, and operating sound, counter-cyclical, fiscal policies. As we see unemployment levels increasing fast, the OECD experience on policies to promote job creation may be useful too. While growth is vital, not any kind of recovery will do. There are systemic threats to the global economy, particularly climate change and poverty, which we must urgently tackle. Indeed, the crisis provides us with the chance to do so now, and it is encouraging to see major OECD governments placing “green” investment at the heart of their own crisis-response strategies for 2009.Such approaches could help poorer countries too. If we are serious about sustainable growth, we must double our development efforts, despite the recession. A Doha trade agreement is in sight, and holds out the promise of more trade, investment and development. Governments must clinch it for everyone’s sake.One thing is clear: the massive public interventions of recent months cannot be sustained indefinitely. They are costly to budgets, and like any strong medicine, may damage the patient in the long run. That is why the OECD is devising “exit strategies”, not to return to the pre-crisis vulnerable arrangements, but to help governments safely withdraw emergency measures without disruption once stability returns.2009 marks the Chinese Year of the Ox, a symbol of patience and hard work, and inspiring confidence in others. The crisis has knocked governments off balance, but like the ox, we must not be knocked off course. The long-term job of building a better tomorrow starts now.For details of the OECD Strategic Response to the crisis, go to www.oecd.org/crisisresponseRead the Reuters article "Davos debate: Towards economic models that work".To download the PDF of the OECD's strategic response to the financial and economic crisis: Contributions to the global effort please click here.©OECD Observer No 270/271 December 2008-January 2009


Economic data

E-Newsletter

Stay up-to-date with the latest news from the OECD by signing up for our e-newsletter :

Twitter feed

Suscribe now

<b>Subscribe now!</b>

To receive your exclusive print editions delivered to you directly


Online edition
Previous editions

Don't miss

  • Africa's cities at the forefront of progress: Africa is urbanising at a historically rapid pace coupled with an unprecedented demographic boom. By 2050, about 56% of Africans are expected to live in cities. This poses major policy challenges, but make no mistake: Africa’s cities and towns are engines of progress that, if harnessed correctly, can fuel the entire continent’s sustainable development.
  • “Nizip” refugee camp visit
    July 2016: OECD Secretary-General Angel Gurría visits the “Nizip” refugee camp, situated between Gaziantep and the Turkish-Syrian border, accompanied by Turkey’s Deputy Prime Minister Mehmet Şimşek. The camp accommodates a small number of the 2.75 million Syrians currently registered in Turkey, mostly outside the camps. In his tour of the camp, Mr Gurría visits a school, speaks with refugees and gives a short interview.
  • OECD Observer i-Sheet Series: OECD Observer i-Sheets are smart contents pages on major issues and events. Use them to find current or recent articles, video, books and working papers. To browse on paper and read on line, or simply download.
  • Queen Maxima of the Netherlands gives a speech next to Mexico's President Enrique Pena Nieto (not pictured) during the International Forum of Financial Inclusion at the National Palace in Mexico City, Mexico June 21, 2016.
  • How sustainable is the ocean as a source of economic development? The Ocean Economy in 2030 examines the risks and uncertainties surrounding the future development of ocean industries, the innovations required in science and technology to support their progress, their potential contribution to green growth and some of the implications for ocean management.
  • OECD Environment Director Simon Upton presented a talk at Imperial College London on 21 April 2016. With the world awash in surplus oil and prices languishing around US$40 per barrel, how can governments step up efforts to transform the world’s energy systems in line with the Paris Agreement?
  • Happy 10th birthday to Twitter. This 2008 OECD Observer interview with Henry Copeland said you’d do well.
  • The OECD Gender Initiative examines existing barriers to gender equality in education, employment, and entrepreneurship. The gender portal monitors the progress made by governments to promote gender equality in both OECD and non-OECD countries and provides good practices based on analytical tools and reliable data.
  • Once migrants reach Europe, countries face integration challenge: OECD's Thomas Liebig speaks to NPR's Audie Cornish.

  • Message from the International Space Station to COP21

  • COP21 Will Get Agreement With Teeth: OECD Secretary-General Angel Gurría on Bloomberg

  • The carbon clock is ticking: OECD’s Gurría on CNBC

  • If we want to reach zero net emissions by the end of the century, we must align our policies for a low-carbon economy, put a price on carbon everywhere, spend less subsidising fossil fuels and invest more in clean energy. OECD at #COP21 – OECD statement for #COP21
  • They are green and local --It’s a new generation of entrepreneurs in Kenya with big dreams of sustainable energy and the drive to see their innovative technologies throughout Africa. blogs.worldbank.org
  • Pole to Paris Project
  • In order to face global warming, Asia needs at least $40 billion per year, derived from both the public and private sector. Read how to bridge the climate financing gap on the Asian Bank of Development's website.
  • How can cities fight climate change?
    Discover projects in Denmark, Canada, Australia, Japan and Mexico.
  • Climate: What's changed, what hasn't, what we can do about it.
    Lecture by OECD Secretary-General Angel Gurría, hosted by the London School of Economics and Aviva Investors in association with ClimateWise, London, UK, 3 July 2015.

  • Climate change: “We should not disagree when scientists tell us we have a window of opportunity–10-15 years–to turn this thing around” argues Senator Bernie Sanders.

  • In the long-run, the EU benefits from migration, says OECD Head of International Migration Division Jean-Christophe Dumont.
  • Is technological progress slowing down? Is it speeding up? At the OECD, we believe the research from our Future of ‪Productivity‬ project helps to resolve this paradox.
  • Is inequality bad for growth? That redistribution boosts economies is not established by the evidence says FT economics editor Chris Giles. Read more on www.ft.com.
  • Catherine Mann, OECD Chief Economist, explains on Bloomberg why "too much bank lending can slow economic growth".
  • Interested in a career in Paris at the OECD? The OECD is a major international organisation, with a mission to build better policies for better lives. With our hub based in one of the world's global cities and offices across continents, find out more at www.oecd.org/careers .

Most Popular Articles

Poll

What issue are you most concerned about in 2016?

Unemployment
Euro crisis
International conflict
Global warming
Other

OECD Insights Blog

NOTE: All signed articles in the OECD Observer express the opinions of the authors
and do not necessarily represent the official views of OECD member countries.

All rights reserved. OECD 2016