A massive and coherent economic stimulus must take place soon to counter the global economic downturn, UN experts said in a report published yesterday in Doha.
The UN called for “massive economic stimulus packages that are coherent and mutually reinforcing on a global basis, and linked with sustainable development imperatives” in its Report on World Economic Situation and Prospects 2009 presented at an international ministerial conference on development financing in the Qatari capital.
The packages “should come on top of the liquidity and recapitalization measures already undertaken by countries in response to the economic crisis,” the report added.
UN economists also proposed “stronger regulation of financial markets and institutions, adequate international liquidity provisioning, an overhaul of the international reserve system and a more inclusive and effective global economic governance, to prevent against any future repetition.”
The report made dire projections for economic growth across the globe next year, with an overall drop in per capita income and developed nations most affected by the global financial crisis.
Developed countries will see a 0.5 percent decline in output, compared with an average growth of 5.3 percent in transition economies and 4.6 percent in developing countries.
World growth will most likely not exceed one percent next year, compared to 2.5 percent this year and rates varying between 3.5 and 4 percent in the four previous years.
US growth will decline by one percent, with the euro zone declining by 0.7 percent and Japan by 0.3 percent. Growth in India, Brazil and Mexico is slated at 7 percent, 2.9 percent and 0.7 percent, respectively.
“But given the great uncertainty prevailing today, a more pessimistic scenario is quite possible,” the report said.
“If the credit crisis continues and confidence is not restored in the financial sector in the coming months,” UN experts explain. “This would bring economic growth in developing countries down to 2.7 percent, dangerously low for their ability to sustain poverty reduction efforts and social and political stability.”
The US has already launched an economic recovery plan worth US$700 billion and China, the world’s fourth-largest economy, has initiated an unprecedented 4 trillion yuan (US$590 billion) stimulus package.
But steps to inject money in the banking system and lower interest rates have failed to restore confidence.
“With limited space for monetary stimulus, fiscal policy options are needed to reactivate the global economy,” the report said.
It said the total cost of US government action in the face of the financial meltdown has reached US$7 trillion, and that the figure could be around US$11 trillion globally.
Rob Vos, the UN’s Development Policy and Analysis Division chief and lead author of the study, said a fiscal stimulus of the “same order of magnitude” may be needed to keep the world economy from shrinking next year.
But the figures may not be as high as US$7 trillion or US$11 trillion because “those are commitments rather than money actually spent,” he said.
“A stimulus of around one to two percent of GDP across the world should be enough to stave off negative growth,” Vos said.
“Maybe not for 2009 but in 2010 there could be a recovery [if the stimulus package goes ahead] unless markets fall further in the meantime.”
Lauding a “fiscal stimulus to be provided in an internationally coordinated fashion,” the UN economists in the report perceive the crisis as “an opportunity to align fiscal stimulus packages with long-term sustainable development goals,” calling for public investment in infrastructure, food production, health, education and renewable energy sources.
They suggest further scrutiny of reasons behind the weakness of the global financial system, which uses the dollar as its reserve currency.
“With net indebtedness of the United States still growing — to about US$2.7 trillion at the end of 2008, up from US$2.5 trillion in 2007 — a disorderly adjustment of global imbalances and a hard landing of the dollar remain major downside risks,” the experts said.
“In that case, investors might again embark on a ‘flight to safety,’ but this time away from dollar-denominated assets instead of to them, pulling the US economy down further, and the global economy with it,” they said.
RETHINK? The defense ministry and Navy Command Headquarters could take over the indigenous submarine project and change its production timeline, a source said Admiral Huang Shu-kuang’s (黃曙光) resignation as head of the Indigenous Submarine Program and as a member of the National Security Council could affect the production of submarines, a source said yesterday. Huang in a statement last night said he had decided to resign due to national security concerns while expressing the hope that it would put a stop to political wrangling that only undermines the advancement of the nation’s defense capabilities. Taiwan People’s Party Legislator Vivian Huang (黃珊珊) yesterday said that the admiral, her older brother, felt it was time for him to step down and that he had completed what he
Taiwan has experienced its most significant improvement in the QS World University Rankings by Subject, data provided on Sunday by international higher education analyst Quacquarelli Symonds (QS) showed. Compared with last year’s edition of the rankings, which measure academic excellence and influence, Taiwanese universities made great improvements in the H Index metric, which evaluates research productivity and its impact, with a notable 30 percent increase overall, QS said. Taiwanese universities also made notable progress in the Citations per Paper metric, which measures the impact of research, achieving a 13 percent increase. Taiwanese universities gained 10 percent in Academic Reputation, but declined 18 percent
CHINA REACTS: The patrol and reconnaissance plane ‘transited the Taiwan Strait in international airspace,’ the 7th Fleet said, while Taipei said it saw nothing unusual The US 7th Fleet yesterday said that a US Navy P-8A Poseidon flew through the Taiwan Strait, a day after US and Chinese defense heads held their first talks since November 2022 in an effort to reduce regional tensions. The patrol and reconnaissance plane “transited the Taiwan Strait in international airspace,” the 7th Fleet said in a news release. “By operating within the Taiwan Strait in accordance with international law, the United States upholds the navigational rights and freedoms of all nations.” In a separate statement, the Ministry of National Defense said that it monitored nearby waters and airspace as the aircraft
UNDER DISCUSSION: The combatant command would integrate fast attack boat and anti-ship missile groups to defend waters closest to the coastline, a source said The military could establish a new combatant command as early as 2026, which would be tasked with defending Taiwan’s territorial waters 24 nautical miles (44.4km) from the nation’s coastline, a source familiar with the matter said yesterday. The new command, which would fall under the Naval Command Headquarters, would be led by a vice admiral and integrate existing fast attack boat and anti-ship missile groups, along with the Naval Maritime Surveillance and Reconnaissance Command, said the source, who asked to remain anonymous. It could be launched by 2026, but details are being discussed and no final timetable has been announced, the source