Category: GLOBAL ECONOMICS


Angel Gurría, Secretary-General of the OECD

 

What is the state of world economy as we enter 2011? Have we made progress over the past 12 to 18 months in putting an end to the worst economic crisis in our lifetimes and laying the foundations for a stronger, cleaner and fairer world?

The scorecard is mixed. We have made good headway in ending the crisis, thanks to co-ordinated international efforts over the past two years, and a recovery is on the way. This is welcome news, since growth is badly needed to help governments deal with massive fiscal pressures, create jobs and address other major challenges.  But we are not out of the woods yet. The recovery has been slower than we had hoped. Government finances have deteriorated sharply across the advanced economies in the OECD area, with public and private debt stretched to extremes in several countries. The aggregate budget deficit for the OECD was around 7.5% in 2010, while public debt as a share of GDP could be some 30% higher in 2011 than it was in 2007.

Unemployment remains intolerably high, averaging 8.5%, and has reached into double digits in some countries. People are worried about their jobs and their living standards. Ongoing difficulties in banking, the prospect of austerity and still weak housing markets are weighing down on the recovery.

In contrast to advanced economies, emerging markets are forging ahead. China’s output is projected to average just short of 10% in 2011-12, thanks to strong domestic demand. India’s growth should regain its trend of around 8.5% from mid-year, while Brazil, Indonesia and South Africa will also continue strong. In the OECD areas, some emerging economies, such as Mexico, Turkey and Poland, are also contributing with higher rates of growth.

But emerging markets also face policy challenges of their own. For instance, inflationary pressures are appearing in Brazil and China, while India has to tackle its fiscal deficit. There is also a growing need for these countries to focus more spending on social goals, and on advancing the structural reform agenda.

Poorer developing countries face a more difficult time, particularly in Africa where growth rates have slowed sharply, to around 2.5% in 2009, bringing GDP per head to a standstill. Though activity picked up in 2010, the situation does not augur well for meeting the Millennium Development Goals for 2015, with nearly a billion people still at risk of being trapped in poverty in five years time.

Slower growth than envisaged in the international trade arena has not helped, adding to global nervousness in currency markets and threats of protectionism.

Addressing these issues will remain a priority in 2011. Policy approaches required in most developed countries clearly differ from those needed in emerging markets. However, because the economic effects of these policies can be global, they must be co-ordinated through multilateral co-operation. This need has increased the prominence of the G20, which brings major developed and emerging markets around the table with the support of other countries and international organisations, including the OECD.

Meanwhile, we have stepped up our co-operation efforts to address other urgent matters too; at the UN Climate Change Conference in Cancún in December, for instance, all major players reaffirmed their commitment to tackling greenhouse gas emissions and we are addressing issues of mitigation, adaptation, financing and technology transfer.

So, while the overall economic scorecard for 2010 was disappointing, we nonetheless enter 2011 on a positive footing. Everyone realises that this recovery, fragile as it is, must be nurtured and strengthened if we are to build the bright future we all want. In short, we must get it right in 2011.


Promoting a sustainable recovery, fostering new sources of growth

The challenges that different countries face vary, depending on their level of development. However, the structural reform agenda–to enhance the productive capacity of our economies–is a unifying link in current policy discussions. At the G20 summits, I have emphasised this point, given the limited room for manoeuvre on the fiscal and monetary fronts. Structural reforms help by dealing with fiscal and international balancing issues, while fostering new sources of growth, and are part and parcel of the G20’s most innovative initiative: the Framework for Strong, Sustainable and Balanced Growth.

As a guiding light in this structural agenda, innovation is key to solving many economic problems. The OECD Innovation Strategy, launched in 2010, provides a set of policy recommendations to integrate this concept into the growth plans of OECD and partner countries. We see innovation in its broad sense, starting with R&D, but going well beyond it. Innovation calls for intelligent competition policies; investment in human resources, including in higher education and its links with businesses; better regulatory environments for firms; and the fostering of an entrepreneurial spirit.

Not surprisingly, innovation is a key pillar in our Green Growth Strategy, which we will be presenting to our 50th anniversary Ministerial Council Meeting in May 2011. The issue is not just about greening old activities or making them cleaner, but about harnessing knowledge and new technologies to create jobs and wealth in a sustainable manner. It requires overcoming barriers to green growth, including eliminating environmentally harmful subsidies, and reviewing the structure of taxation systems and trade barriers. It also requires implementing regulatory frameworks to foster a shift away from inefficient and polluting consumption and production patterns.

Our message that “green” and “growth” go well together was delivered clearly at the UN Climate Change Conference (COP 16) in Mexico in December 2010, where important breakthroughs on agreements were achieved. This helped re-inject confidence into both the international climate change negotiations and the multilateral process overall. In 2011, the OECD will continue to build on such progress towards the next Climate Change Conference (COP 17), in Durban, South Africa.

In the quest to rebuild the international economy and put it on a sounder basis, we should also address the growing gap between how conventional macro-economic statistics such as GDP are read, and how people perceive their own economic situations. A broader range of indicators must be used alongside standard economic measurements to better capture peoples’ well-being and quality of life. At the OECD we are working to develop such measurements, as well as to distil the policy implications of this broader approach.


Jobs, skills and knowledge: Catalysts for a new economy

High unemployment has been the tragic human face of this crisis, and only when we bring unemployment down will we be able to declare the crisis over. Keeping vulnerable people attached to the job market, including the long-term unemployed, is essential.

A key requirement is to boost skills. This applies particularly to young people, who are more than twice as likely to be unemployed than the average worker. Since the crisis started, 3.5 million young people have joined the ranks of the unemployed in the OECD area, while still more have left the workforce altogether. This is a waste of resources which no country can afford. We must do more to avoid a lost generation and to tap into the potential and creativity that the young generation has to offer.

The post-crisis world will likely evidence the need for new skills. Workers will need to continue upgrading their skills to increase their chances of employability. We already observe an important change in policy focus from “life-long employment” to “life-long employability”. To make this happen, lifelong learning will be one of the most important features in the successful economies and societies of the future. Improving jobs and skills, regardless of gender, age or background, must go hand in hand, and the OECD is developing a skills strategy to show how this can be achieved.


Empowering women

As we look for new sources of growth, we must not forget that in many countries, women’s participation in the labour market lags below potential.
The crisis has made it clear that failing to realise the full potential of women carries huge economic and social costs. Yet enabling women fully to participate in the labour market and contribute to economic development promotes prosperity and stability, reduces child poverty, helps address the pressures of population ageing, and increases productivity. The OECD will be assessing the best policy practices needed to promote gender equality and take fuller advantage of women’s potential.


Advancing global development

Development is a central priority for action in 2011. It has always been at the heart of the OECD’s mission, and indeed was a central motive for creating the organisation in the first place. In half a century of development assistance, there are many success stories to tell, with millions being lifted out of poverty, and the rise of emerging markets being prime examples. The developing world now accounts for over a fifth of total trade and is an integral part of the world economy. This is to be celebrated as it is what the OECD has worked towards since its creation.

In 2011 we must work harder to lift people out of poverty. The OECD is stepping up its co-operation with developing countries, by going beyond aid to assist with institutional and capacity building in areas such as taxation. We are promoting “whole-of-government” approaches that embrace innovation and green growth, which can help reduce food and water scarcity problems, and improve healthcare. The aim is to build resilience. Developing countries must be able to play a fuller role in building a better world, and, as our convention says, it is our duty to help them do so.

The role of emerging markets is critical in this regard, and this gives extra relevance to the G20. We must all work together to solve trade and currency tensions, conclude the Doha round of trade talks and restore balance to the global economy.

Addressing such problems is the bread and butter of our organisation. It can only be done through co-operation. Indeed, if “co-operation” is part of our title, it is largely because our founders were convinced it was vital for the “peaceful and harmonious relations among the peoples of the world”.


Restoring trust in public and private institutions

No fundamental reform will work without taking action in 2011 to strengthen the governance of our economies. For people who had been used to years of continuous growth, the crisis came as a shock, undermining not only the institutions themselves, but the public’s faith in them. The crisis uncovered serious failures in governance and regulation. Livelihoods collapsed, and people are demanding better management of their economies. Failure to restore trust could fuel an even more serious crisis in the future.

The OECD has been leading the charge, with our Anti-Bribery Convention which criminalises bribery of foreign officials for business contracts, with our 2010 guidelines to make lobbying more transparent and ethical, and via our corporate governance principles. Additionally, our Guidelines on Multinational Enterprises are currently being strengthened. Members and partner countries alike have endorsed these powerful instruments, but should do far more to use them in their efforts to restore confidence in 2011.

One area where action is needed is in our financial markets, to deepen reforms which improve bank resilience and reduce the exposure of our economic systems to excessive risk-taking. The international community has spent trillions of dollars rescuing the financial system, but the sector is still not back to full health.

One thing we have learned is that bank bailouts and guarantees are not enough. We must fix a system where losses made by greedy investors during boom times are passed on to ordinary taxpayers during bad times. This is not only an unfair way to share the risks, it is also a market distortion that increases the likelihood of another bank-led crisis in the future.


Shifting wealth, the G20 and the OECD

The crisis also emphasised an emerging trend that the OECD has characterised as “shifting wealth”. This trend means that countries like Chinaand Indiaare increasing their economic power and their say in the global economy. By the first quarter of 2010, developing countries held approximately two-thirds of global currency reserves, up from only a third a decade earlier. By 2030, we estimate that emerging economies will account for nearly 60% of world GDP. In the developing world, this shift in wealth has brought substantial improvements in growth and poverty reduction. The number of people in the world living on less than a dollar a day has fallen by more than a quarter– approximately half a billion–since 1990. About 90% of these people were in China.

But the challenges associated with this rapid change in global economics are significant: how can we ensure global financial stability? How can we deal with climate change? How can we manage natural resources in a sustainable way, while protecting everyone’s right to a decent way of life?

The emergence of the G20 as the premier forum for economic discussions and action is probably the greatest transformation in global governance since 1945. Indeed, the G20 facilitated a quick response to the immediate, short-term challenges posed by the financial crisis. But it is also gradually providing a forum for promoting a multilateral approach to structural issues, ranging from taxation and combating corruption, to the promotion of trade and investment.

How can an organisation like the OECD help foster global governance and promote multilateral co-operation in this rapidly changing world? Here, I must quote former Chilean President Michelle Bachelet, who once described the OECD not as “the club of rich countries”, as many people wrongly characterise us, but as a “club of best practices”.

Since its inception, G20 leaders have called on the OECD for our contributions on a wide range of issues. These include substantive analytical work and policy advice on fossil fuel subsidies, on employment and social policies, on investment and trade, on bribery and corruption, on taxation and on the Framework for Strong, Sustainable and Balanced Growth, particularly the structural aspects. Thanks to several decades of experience on development issues, we are also actively contributing in the creation of the G20’s new Development Action Plan.

Yet, while the scope of the OECD’s work is vast and unique, maximising our effectiveness and relevance means that we must also become more global. In 2010 Chile, Estonia, Israel and Slovenia became members of the OECD and accession talks with Russia are advancing. We are designing innovative arrangements to engage with non-member countries, particularly through our Enhanced Engagement programme with Brazil, China, India, Indonesia and South Africa. Some 100 non-member countries participate regularly as equals in the work of our committees, expert meetings and forums. We also work closely with business, trade unions, foundations and not-for-profit organisations.

Expectations are high, and we look forward to working with the French presidency of the G20 in 2011 to get the job done in these and many other areas.


Using our past to build a better future

Our organisation has played an important role in forging this better world, by setting standards and acting as a pathfinder for better practices. We will continue to work alongside members and partners to help them meet those standards, and to steer a course through current difficulties. As well as providing facts and insights, our advice will assist them in the tricky task of making reform happen.

The world economy has made giant strides in 50 years. But it is a more complex world and the challenges before us are as serious as any we have faced in the past. Yet, the goals our founders set for this organisation remain true today. Indeed, the OECD Convention, which was signed on 14 December 1960, could have been written precisely with today’s challenges in mind, and in particular with our main objective of promoting “better policies for better lives”.

©OECD Yearbook 2011

 

WORLD ECON NOTE 0001: 2011 WORLD ECONOMIC STATISTICS

 SOURCE: FREE WORLD ECONOMY REPORT, 18 MAY 2011

 

The World Economy

Great Financial Crisis? What Great Financial Crisis?

That seems to be the attitude in 2011. Which worries us at EconomyWatch.com, because we do not believe that the underlying problems have been solved. If anything, they have been exacerbated.

But first, the numbers, taken as ever from our Economic Statistics Database.

World Economic Statistics at a Glance – 2011 Forecast

World GDP (PPP): $78.092 trillion
GDP Growth Rate: 3.3%
GDP Per Capita (PPP): $11,100
GDP By Sector: Services 63.4%, Industry 30.8%, Agriculture 5.8%
Growth In Trade Volume: 6.953%
Industrial Production Growth Rate: 4.6%
Population: 6.768 billion
Population Growth Rate: 1.133%
Urban Population: 50.5%
Urbanization Rate: 1.85% (125 million people move to cities every year)
The Poor (Income below $2 per day): Approx 3.25 billion (~ 50%)
Millionaires: Approx 10 million (~ 0.15%)
Labor Force: 3.232 billion
Inflation Rate – Developed Countries: 2.5%
Inflation Rate – Developing Countries: 5.6%
Unemployment Rate: 8.8%

Investment: 23.4% of GDP
Public Debt: 58.3% of GDP
Market Value of Publicly Traded Companies: $48.85 trillion, or 62.6% of World GDP

Sources: EconomyWatch.com Economic Statistics Database, CIA World Factbook, IMF, World Bank

The World Economy in 2010 was worth $74.007 trillion in GDP terms, using the Purchasing Price Parity (PPP) method of valuation. This is expected to grow to $78.092 trillion in 2011.

The overall global economy averaged a 3.2 per cent growth rate between 2000 and 2007, suffering a slight dip in 2001 – 2002 thanks to the Dot Com Crash, but continuing to grow throughout that period. In fact 2004 – 2007 were boom years. The Emerging Markets, led by the giants ofChina,India,Russia andBrazil (the BRIC countries) had been posting 7 per cent – 10 per cent growth rates for years. Property and stock market booms had brought consistent growth in North America andEurope. Investment was bringing economic development to much of the Middle East and Africa, and evenJapan was recovering from its deflationary ‘Lost Years’.

Economic conditions within these countries play a major role in setting the economic atmosphere of less well-to-do nations and their economies. In many aspects, developing and less developed economies depend on the developed countries for their economic wellbeing.

Theories were even circulating that thanks to the growth of the developing world, we might enjoy years of unfettered growth, as new markets would go through successive growth spurts and counter the effects of slowing growth elsewhere. It was suggested that Asia was ‘decoupling’ from theUSand able to grow under its own steam thanks to its two ‘Awakening Giants’.

Sadly, that turned out to be hogwash, as deregulation allowed western banks to build up unsustainable levels of debt that brought the global economy to the brink of depression.

As the ‘Sub-Prime’ Crisis morphed into a fully fledged crash then global Financial Crisis, 2008 started to bomb and 2009 became the first year that the world recorded a loss in GDP since World War II. 2.031% was wiped out of the global economy – or $3.3 trillion of value.

You can see the full World GDP Growth data series here.

We are now in what the IMF calls a ‘Two Speed Recovery Process’.

World GDP Growth by Country, 2010

Advanced economies have now shrunk as much as feared, but they are either growing slowly or stagnating, with unsustainable debt levels and persistently high unemployment. The US is continuing to stimulate its economy – although it seems more like giving free money to banks who then horde it – which continues to raise debt levels, while the Europeans, thanks to the Eurozone Crisis of 2010, are more focused on budget cuts, helping to reduce debts but keeping unemployment high with a chance of a second recession hitting (the so-called W-shaped recovery).Japan continues to struggle with high debt, a strong currency and deflation.

There are exceptions, of course. Australiaand Canadahave both done well from rising commodity prices and well-managed banks, while the amazing German high-end export machine goes from strength to strength – putting further pressure on its Eurozone partners in the process.

Developing economies, on the other hand, are experiencing strong growth, as they continue to invest in their own infrastruccture, grow overall exports, and start to see increased levels of consumption from the hundreds of millions that they pull out of poverty every year, the tens of millions that join the middle class, and the millions that join the ranks of the rich.

This emerging market growth process is also leading to an urbanized planet. For the first time in 2010, the majority of the world’s population lived in cities (50.5% or 3.417 billion people), and that number is growing by over 125 million people a year.

This two-speed process has led to a rapid change of the politcal and economic power structure that has existed since the end of World War II.

During this period, we have seen China Overtake Japan as the world’s second largest economy, and the replacement of the old G7/ G8 structure with the G20, bringing together the twenty most important economies from both the advanced and developing worlds.

But let us get back to why we now find ourselves in a world where the ‘advanced’ economies are in such a sluggish mood.
 

Yes, There Was a Great Financial Crisis. No, it Wasn’t a ‘Freak’ Accident that No One Could Have Predicted. No, it Hasn’t Been Solved.

De-regulation allowed banks to grow bigger and bigger by taking on ever greater leverage – i.e. betting with borrowed or engineered money – against ever smaller capital reserves.

When valuations were going up, leverage helped to fatten profits. Bankers and their shareholders didn’t need to laugh all the way to the bank, since they already owned it.

But when markets turned (despite models that assumed that housing markets only ever went up) that leverage amplified losses. Vague concepts of ‘moral hazard’ quickly turned to a Too Big To Fail policy. The fear was that if one bank failed, the domino effect could take the whole system down.

And rather than set about cleaning up the system, western governments proceeded to save those banks with taxpayer money, while the commercial paper markets froze, the Baltic Dry Index went effectively to zero, and real unemployment started climbing to depression-era levels.

Bankers have since gone back to paying themselves billions in bonuses while their debts have effectively been nationlized and transferred to government debt. Meanwhile unemployment remains stubbornly high.

National Debt marked the second phase of the Great Financial Crisis, that started in 2009 with Dubai’s defaults. While Dubaiwas saved by the oil wealth of Abu Dhabi, Europein 2010 was a different story. The structural problem of the European Union, in which Monetary Policy has been centralized while Fiscal Policy remains national, was fully exposed by the soaring bond costs for the PIIGS countries. The Eurozone Crisis started inGreece, quickly spread throughPortugal andIreland, and even threatend theUK.

World GDP (PPP) Per Country, 2010

The response involves loans that (surprise surprise) lets European banks keep their money, while austrity measures throw yet more people on the breadline. At the start of 2011, one in eight working age Spaniards is out of a job, while cuts to government services budgets are reaching 40 per cent in instances.

With the exception of the incredible German export machine, powered by the mittelstand,Europeis lowing at a prolonged period of low growth and civil unrest.

That on its own would be bad enough, but combined with the next problem, it could be truly disasterous.

Inflation is Back – and Stagflation is Coming

Just before the dawn of the 21st century, oil averaged $16 a barrel. By July 2008, less than 10 years later, oil hit a high of $146 a barrel – a stunning rise of more than 800%. From early 2007 to mid 2008 alone the price has risen more than threefold from the mid $40s.

During the Oil Crisis of the 1970s, oil spiked at a nominal peak of $38. In today’s prices (adjusted for inflation), that is $106, a figure that we blew past in early 2008.

With uprisings and revolution sweeping the arab world, we are now back over $100 at the start of 2011. It seems unlikely they will stay here, despite the growth of natural gas supplies. As emerging markets drive ever greater resource demands, a set of Wikileaks documents confirm what many have suspected; that the Saudis have exaggerated their reserves and Peak Oil has already been reached.

In fact there is a growing school of thought known as ‘Peak Oil’ that believes we have – or will soon – reach peak oil production capabilities. In the 1950s Dr M. King Hubbert correctly predicted peak oil and decline rates for the mainland USoil industry. His model came to be known as The Hubbert Peak Theory. It predicts that world peak oil production will be reached sometime between 2000 and 2010, and will decline thereafter.
The costs of commodities across the board are being driven up by the 3 billion inhabitants of the BRIC nations, whose wealth is growing at 8 per cent to 10 per cent a year, not to mention a further 2 billion or so in the other emerging markets.

As long as supply can’t keep up with demand, and with all the cheap money that is flowing into markets from western central banks, inflation growth is likely.

This could challenge social stability in poorer countries – and could signal stagflation for the advanced economies.

Conversely, it has been powering a period of strong economic growth in Africa, with countries likeGhana now leading global growth figures.

Although it should be fuelling similar growth stories in theMiddle East, something else has been growing – descent.

A younger generation of well-educated but un- or under-employed youth are no longer ready to accept autocratic rule, corruption and a lack of civil society.

If they manage to bring real change to their countries, in the form of plural democracies and greater accountability, the world’s political economy could be re-configured in unexpected ways.

 

World Economic Situation and Prospects 2011 Report

UN: Global economy unlikely to improve significantly next year

Dec 01, 2010

A United Nations report unveiled today paints a gloomy picture of the performance of the global economy next year, with growth projected to be a meagre 3.1 per cent, followed by 3.5 per cent in 2012 – rates that are insufficient to spur the recovery of the jobs that were lost during the economic crisis.

The lack of employment continues to put a damper on economic recovery, according to the World Economic Situation and Prospects 2011, prepared by the UN Department of Economic and Social Affairs, the UN Conference on Trade and Development (UNCTAD) and the five UN economic commissions.

Between 2007 and the end of 2009, at least 30 million jobs were lost worldwide as a result of the global financial crisis, the report, previewed in New York, says. It adds that efforts by governments to embark on fiscal austerity can only further suppress the prospects for a faster recovery of employment.

“We are not out of the woods yet and still major risks are looming,” said Rob Vos, the Director of the Development Policy and Analysis Division of DESA, who led the team of UN economists who prepared the report.

“The road to recovery – we expect to be long and bumpy still. The speed of the recovery as we have seen starting in the middle of 2009 has started to decelerate in the middle of this year particularly owing to weaknesses in the major developed economies, but we also expect that to drag down the growth in developing countries,” Mr. Vos told a news conference at UN Headquarters.

The report says that serious risks to the global economy include waning cooperative spirit among major economies, which has weakened the effectiveness of responses to the crisis. It notes that uncoordinated monetary responses have become a source of turbulence and uncertainty in financial markets.

Among developed economies, the United States has been on a recovery trajectory, yet the pace of that rebound has been the weakest in the country’s post-recession experience, according to the report. At 2.6 per cent in 2010, growth in the US is expected to moderate further to 2.2 per cent in 2011 before improving slightly to 2.8 per cent in 2012.

That pace of growth is not expected to make much of a dent in unemployment rates, and recovering the jobs lost in the US during the crisis would take at least another four years.

Prospects for Europe and Japan are even dimmer, the report notes. Assuming continued, albeit moderate, recovery in Germany, the gross domestic product (GDP) growth in the Euro area is forecast to virtually stagnate at 1.3 per cent in 2011 and 1.9 per cent in 2012.

Japan’s initially strong rebound, fuelled by net export growth, started to falter in the course of 2010 as a result of persistent deflation and elevated public debt. The Asian country’s economy is expected to grow by a meagre 1.1 per cent in 2011 and 1.4 per cent in 2012.

Among the economies in transition, GDP of the Commonwealth of Independent States (CIS) and Georgia rebounded by about 4 per cent on average in 2010, up from the deep contraction of more than 7 per cent in 2009. In 2011 and 2012, the pace of recovery in South-eastern Europe is expected to be rather subdued.

The survey shows that developing countries continue to drive the global recovery, but their output growth is also expected to shrink to 6 per cent during 2011-2012, down from 7 per cent in 2010, because of the slowdown in the advanced countries and the phasing out of stimulus measures.

Developing countries in Asia, led by China and India, continue to show the strongest growth performance, but will moderate to around 7 per cent in 2011 and 2012, according to the report.

Growth in Latin America is projected to remain relatively strong at around 4 per cent, though less robust than the GDP growth of 5.6 per cent estimated for 2010. Brazil, the engine of regional growth, continues with strong domestic demand to boost export growth of neighbouring countries. The sub-region also benefits from strengthened economic ties with the emerging economies in Asia.

In the Middle East and other countries in Western Asia, recovery is also expected to moderate from 5.5 per cent in 2010 to 4.7 per cent in 2011 and 4.4 per cent in 2012. The average annual output growth will be lower than the pre-crisis rate.

Recovery has been solid in most of Africa, where the rebound is expected to continue at about 5 per cent per year in 2011 and 2012, but this is well below potential, and conditions vary across the region. The economies in East Africa are showing strong growth, but several of the poorest countries, especially those in the Sahel region, have suffered from droughts and conditions of insecurity, which is causing hunger and hampering the recovery of their economies.

Suggestions offered in the report that might lead to sustainable recovery include providing additional fiscal stimulus and redesigning the stimulus and other economic policies to lend a stronger orientation towards measures that directly support job growth, reduce income inequality and strengthen sustainable production capacity on the supply side.

Other options include finding greater synergy between fiscal and monetary stimulus, while counteracting damaging international spill-over effects in the form of increased currency tensions and volatile short-term capital flows; ensure that sufficient and stable development finance is made available for developing countries; and finding ways for credible and effective policy coordination among major economies.