Mr. Wu Hongbo Under-Secretary-General for Economic and Social Affairs, Secretary-General for the International Conference on Small Island Developing States
Statement for roundtable at the VI Astana Economic Forum and World anti-crisis conference
24 May 2013, Astana , Kazakhstan
Your Excellency, Mr. Nursultan Nazarbayev, President of the Republic of Kazakhstan,
Your Excellency, Mr. Vuk Jeremić, President of the General Assembly,
Your Excellency, Mr. Nestor Osorio, President of the United Nations Economic and Social Council,
Ladies and Gentlemen,
I am very pleased to address you today also in my capacity as the Under-Secretary-General for Economic and Social Affairs.
I join Secretary-General Ban Ki-moon in congratulating the Government of Kazakhstan for convening this Conference, and for bringing together government leaders and world-renowned experts. We are deeply appreciative of the warm hospitality extended to the participants.
The agenda of the Sixth Astana Economic Forum and World Anti-Crisis Conference highlights the crucial issues facing the world economy today, nearly five years after the global financial crisis.
I will speak on three broad issues:
- the world economic situation and prospects;
- the policy challenges; and
- the need to strengthen global economic governance.
First, a few words on the world economic situation and prospects.
Most recently, we have seen measurable improvement in the world economy. The risk of a euro-area break-up has declined considerably.
The United States economy has largely averted the fiscal cliff. And, a significant slowdown in some of the large emerging economies in 2012 has been avoided.
Stock markets have also gained noticeably, and the bond spreads lowered markedly for some euro members.
However, real economic activity worldwide remains subdued. According to the latest UN forecast, the world economy will grow in 2013 at 2.3 per cent, the same sluggish pace as it did in 2012.
A mild pick-up in global activity is only expected later this year, and into 2014.
In almost all regions, growth will remain well below potential. Employment gains will be weak.
Among developed countries, the situation in the euro area remains precarious. A number of euro members are falling into a double-dip recession. No growth is expected for the region in 2013.
While the U.S. economy is doing better than Europe, its prospects are still subject to uncertainties associated with its fiscal policy.
Growth prospects for developing countries, and economies in transition, are notably stronger.
However, potential growth is probably lower than before the global financial crisis. Some of these economies also face structural challenges.
Overall, risks for the global economy remain, despite the recent progress in some areas.
The possibility of a further deterioration in the euro area is a major risk factor. Fiscal policy in the United States remains uncertain. There also remains a risk of a further slowdown in some of the large developing countries.
Combined, these risks have the potential, once again, to derail the global recovery.
Let me now turn to policy challenges.
The main objective for current macroeconomic policies is to support a robust global recovery with a focus on promoting job creation.
The policy mix in individual countries, however, should be based on national circumstances. We should refrain from one-size-fits-all recommendations.
In the area of fiscal policy, the effects of fiscal tightening, on output and employment in the current economic environment, are much larger than originally estimated. This is particularly noted when countries tighten their fiscal policies simultaneously.
Therefore, for countries facing low financing costs and high unemployment, it would be desirable to consider fiscal tightening and methods to boost the economy in a wholistic way.
At the same time, policymakers should lay out a credible plan for fiscal sustainability.
Countries in debt crisis, or facing high financing costs, may have to front-load fiscal consolidation.
However, they should maintain adequate social protection for the most vulnerable groups, while making necessary structural reforms.
More importantly, we need to enhance international policy coordination in a number of fronts.
We need to mitigate the spill-over effects of the monetary policies in developed countries on other economies. These may include increased volatility in capital inflows and international commodity prices, and appreciation pressures on currencies.
We must ensure that sufficient resources are made available to developing countries – especially the least developed countries – to accelerate their progress on the Millennium Development Goals.
Ladies and Gentlemen,
I come to my third and final issue, the need for concerted actions to strengthen global economic governance.
The world economy has undergone significant changes during the past few decades. Going forward, strengthening the voice and participation of developing countries in multilateral frameworks and norm-setting must remain a priority on the global economic governance reform agenda.
The movement of the IMF and the World Bank towards more representative governance structures is welcome, but more needs to be done. The process of ratification of the 2010 IMF quota and governance reforms must be fully completed.
The G20 is a welcome improvement over earlier groupings, such as the G7.
However, it is important for the G20 to continue to strengthen its engagement with the United Nations and relevant stakeholders.
The recent debate in the United Nations on global economic governance showed broad consensus on the importance of strengthening the relationship between the G20 and the UN, as well as greater G20 outreach.
An effective system of global economic governance would enhance the global partnership for development, and ensure the participation of relevant actors in international policy making and dialogue.
Effective global economic governance is critical to achieving the MDGs by 2015. It is also needed for an inclusive development agenda beyond 2015, with sustainable development goals at its core.
I am confident that the discussions here will help to find common ground and policy solutions, so that meaningful system reforms can be undertaken.
Thank you very much.