International trade will fall by some 13%, and by end-2010 unemployment will reach double figures in many countries, aggravating an unfolding social crisis. A policy-induced recovery is expected in 2010, but the risks remain tilted to the downside. No country will be immune from what is a truly global crisis.
It was to defy this bleak outlook that G20 leaders pledged in London on 2 April to do all they can to tackle the crisis, reform the failed financial system and restore confidence and growth. The summit was a success and reflected strong leadership and co-operation, as well as hard work behind the scenes by many international organisations, including the OECD.
The summit has raised people's hopes of a speedy upturn, with occasional sightings of "green shoots", no doubt partly as a result of some rather large fiscal stimulus packages-an average budget impact of 2.5% of GDP for those OECD countries that have launched them, and as much as 5.5% of 2008 GDP for the US.
Unfortunately, we are still at the beginning of the road to recovery. Unlike many previous recessions triggered by external shocks, this time a solid upturn will depend on repairing the economic system itself.
The OECD is intensifying its efforts to help governments overcome the crisis and prepare for the longer term. Our constantly updated Strategic Response supports the G20 pledges to restore confidence, growth and jobs; repair and strengthen the financial system; promote global trade and investment and reject protectionism; and build an inclusive, green and sustainable recovery for all, including poorer countries.
We have already issued several reports and assessments in response to government requests, for instance, on aligning stimulus measures with sustainable growth; on corporate governance; on building trust in global investment; on keeping markets open to trade and competition; and on tracking development aid.
A major responsibility of the OECD is to look beyond the crisis at the recovery that will eventually come. No one wants a return to business-as-usual, but governments are rightly anxious that today's measures to combat the crisis do not damage the long-term health of their economies. A first report which assesses different "exit strategies" for unwinding those emergency positions, particularly in financial markets, is now available from the OECD.
Our Strategic Response continues to deliver results in key areas. For example, we have delivered concrete breakthroughs in the vital area of tax evasion and the G20 pledge to "take action against noncooperative jurisdictions" and to end bank secrecy as part of an effort to protect public finances and financial systems.
OECD has long set the international standard for the exchange of information for tax purposes and we reported on progress in implementing that standard to the G20. Thanks to the summit, more was achieved to improve transparency in two or three weeks than in the last decade, with tax agreements signed and commitments made by several jurisdictions, from the Cayman Islands, Costa Rica and Macao, China to the Philippines, Switzerland and Uruguay.
This remarkable advance owes much to political determination, but action was made possible by having agreed an international standard in the first place. It is a key lesson, and momentum is now building within the G8 and G20 to develop common principles and standards on integrity, transparency and propriety for a range of other global challenges, including investment, the environment, labour and health.
The OECD is busy with other international organisations on this dossier too, having compiled an inventory of existing policy standards and instruments. Reviewing this dense armoury in light of the crisis should help identify which areas in the global framework need strengthening.
Many lessons will be drawn from this crisis, though few are as poignant as the need for countries to work together in a fastchanging world. As US President Obama jokingly put it at the G20, in the past a few major powers could agree over brandy and cigars, but today's world is more diverse, with players such as Brazil, China and South Africa influencing global policy, too.
Co-operation is what OECD stands for. Over the coming months, we will continue working side-by-side with the G8, G20, the EU, and emerging and developing countries in pushing for a stronger, cleaner and fairer world economy. We look forward to fostering more progress when governments and stakeholders from around the world gather for discussions in Paris at OECD Week, starting 22 June. The green shoots of recovery may still be thin, but our determination grows stronger by the day.
See OECD's response to the crisis: www.oecd.org/crisisresponse
See also www.oecd.org/secretarygeneral
Read all articles by Angel Gurría: www.oecdobserver.org/angelgurria
©OECD Observer No. 272, April 2009