Responding to the financial and economic crisis

Feature

2312/2008 - With major developed economies now in or threatened by recession, the OECD has developed a proposed strategic response to the crisis focusing on two priority areas: finance, competition and governance; and restoring long-term growth.

 
GDP growth rates for 2008 to 2010
in OECD member and non-member countries

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Economy

Economic activity is expected to fall by 0.9 percent in the US this year, by 0.6 percent in the Euro area and by 0.1 percent in Japan, according to the November 2008 OECD Economic Outlook. Among the countries likely to be hit hardest are those which are particularly vulnerable to the financial turmoil or to falling house prices such Britain, Hungary, Iceland, Ireland, Luxembourg, Spain and Turkey. The US economy will probably get worse before it gets better.

Employment

The number of unemployed in OECD countries is expected to rise by about 8 million people over the next two years from 34 million in 2008 to 42.1 million in 2010 – the most rapid rise in OECD unemployment since the early 1990s.

Aid and trade

OECD countries have reaffirmed their commitments on aid to developing countries and undertaken to abstain from trade protectionism. The crisis is hitting developing and emerging countries hard. Major exporters have pledged to maintain their support for export credit in a statement to help ensure that international trade keeps flowing.

What impact will the crisis have on employment?

How did the financial crisis turn into a global economic downturn? 

As part of a global response to the crisis, OECD has worked with governments to develop a twin-strand strategic response involving tighter regulation and oversight of financial markets and improved national policies to promote economic growth. Foreshadowing the OECD work, Secretary-General Gurría said it will include work on the social impact of the crisis, including labour market policies, and continuing work on reforming financial markets and private pension systems.

OECD has highlighted the failures in corporate governance that the crisis has revealed and urged that internationally agreed standards, such as the OECD Principles of Corporate Governance, be strengthened. OECD will also address taxation policy and its implications for growth, and the need for increased transparency in cross-border financial transactions.

More work on the financial crisis:

• IMF
• World Bank
• African Development Bank
• European Commission

Read the OECD Observer's
special edition on
the financial crisis