According to IMF forecasts, there are considerable downside risks. The world economy is forecast to grow by 3.3 per cent in 2012 and 3.6 per cent in 2013. Debt levels in most industrialised countries are still unsustainably high. Unemployment has reached a new record high in many countries. Because of modest growth prospects and considerable uncertainty, financial markets, investor and household confidence has not yet returned to pre-crisis levels.
To restore confidence and to improve growth and employment prospects, decisive action has to be taken to ensure fiscal consolidation at an appropriate pace coupled with structural reforms. Policy action will need to maximise synergies between macro-economic and structural instruments. The eurozone has to work on the future of the European Monetary Union by implementing comprehensive reforms designed to enhance growth and competitiveness. The United States has to embark on a credible fiscal consolidation path. Emerging economies, which have been major contributors to global growth, increasingly have to meet the challenges of pursuing a growth path that is both inclusive and sustainable; economic policies in these countries and others need to be adjusted and to be brought in line with global rebalancing.
Our common approach of international economic policy cooperation has to make use of institutional linkages between national governments, international organisations and other stakeholders. We welcome the ongoing cooperation between the IMF, the World Bank Group, the ILO, the OECD and the WTO in the following areas:
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Boosting innovation, improving education, strengthening competition and reforming health systems and labour markets remain on the agenda of both advanced and emerging economies. By implementing adequate measures, growth potential will be enhanced, new employment generated and fiscal consolidation supported. In particular, we welcome the efforts several eurozone countries are undertaking to enhance their external competitiveness and to consolidate their budgets. As a result, investor confidence in these countries has improved. Nevertheless, further efforts, especially with respect to youth employment generation, structural reform and effective social protection systems, are urgently needed. According to OECD estimates, reforms in the labour and product markets could raise output by up to 4 percentage points in 10 years.
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Sound macro-economic policies have to go hand in hand with efforts to increase employment, drawing on the ILO’s Decent Work Agenda and on its Global Jobs Pact approach adopted at the ILO International Labour Conference of 2009. In particular, strategies to reduce youth unemployment have to be implemented with high political priority. We welcome the new analysis of job creation in developing countries in the World Development Report and the opportunities for strong collaboration in this area.
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We are convinced that international trade has a major role in fostering global growth and employment. It is crucial to resist adopting protectionist measures and to keep markets open. We regret that the WTO Doha Round has come to a standstill. While bilateral trade agreements are attractive for the parties involved, multilateral trade opening remains the best way to ensure fair competition, prevent trade distortions and create new market opportunities on a global scale, especially for developing countries. This is why we strongly support advancing those issues in the WTO negotiating agenda which are closer to completion, such as a deal on trade facilitation.
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