The world economy is facing a significant slowdown. The OECD forecasts that on average GDP in its member countries will fall by an average of 4.3% this year. The
Meanwhile, the drop in demand in the richer countries is impacting the poorest in the world. While food prices have held up, demand for metals and other commodities has fallen. Demand for manufactured products is also dropping. This is affecting the job prospects of millions. Moreover, countries do not receive the tax revenues from extractive industries that they have become used to.
The financial system remains in a fragile state and governments have to continue to take action to support banks and help them deal with ‘toxic’ assets. This is the first step to restoring economic confidence. There are some early signs that confidence, while subdued, has at least recovered from the lows of a few weeks ago but this needs to be sustained. In addition, governments need to take action to stimulate their economies.
Leaders agreed to resist trade protectionism (and so avoid repeating a mistake made during the Great Depression in the 1930s) and announced measures to improve the regulation and transparency of financial institutions and markets. They restated their commitment to meeting the Millennium Development Goals, achieving increases in aid budgets and further debt relief, and to creating green jobs.
The fact that the leaders seemed to agree at all will probably help sentiment. However, there was little in the final communiqué about the values that Gordon Brown and Australian Prime Minister Kevin Rudd talked about in
An article I have on the CSM website.