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Report of the Secretary General on The World Financial and Economic Crisis and its Impact on Development

The advanced unedited version of the report of the Secretary General on ‘The World Financial and Economic Crisis and effects on Development’ was released on 28 May 2009.

The document was released in the lead up to the UN Conference on the World Financial and Economic Crisis (24-26 June 2009, New York), recognizes unsustainable growth pattern and systemic weaknesses in the global economy as being the root cause of the crisis. The world is now faced with the worst recession since the 1930s, which has affected all financial institutions and national economies, freezing the supply of credit with a devastating effect on the real economy. The report notes that although the crisis did not originate there, developing countries have been the hardest hit through weaker trade, tighter global financing conditions and lower remittances. Most of these countries are not in a position to equally respond with countercyclical measures.

Indeed, many aspects of development are put at risk by the current crisis. These include the potential risk of a prolonged labour market recession, an increase in the cost and substantial slowdown in the progress towards achieving MDGs. Drawing attention to implications of the financial crisis on gender aspects, the report reminds readers that previous economic and financial crises have shown that economic downturns put a disproportionate burden on women. Reduced investments in environmental protection, energy efficiency, renewable energy and water and land management could also slow efforts towards sustainable development. A prolonged recession could have social repercussions, such as social unrest, rising criminality and weakened governance.

Calling for “a new global social contract to rally broad political support for a renewed multilateralism and reorientation of national policies that supports a fairer and sustainable process of globalization” the Secretary General recommends globally concerted action in three key areas:

a) Ensuring adequately coordinated macroeconomic stimulus focused on sustainable development;

b) Addressing systemic issues and reforming global economic governance mechanisms;

c) Improving monitoring mechanisms to ensure greater accountability of global public policy action and improve the capacity to detect and respond to global development emergencies.

The report can be accessed at: http://www.un.org/esa/desa/financialcrisis/document/s-g_fin_crisis_final_advance.pdf

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