The United Nations Conference on Trade and Development, UNCTAD, is calling for stronger cooperation among nations to boost the global economy. The U.N. agency says cooperation is more urgent than ever after last month's terrorist attacks in the United States.
UNCTAD says the world economy was heading for recession even before the events of September 11 but the attacks worsened what was already going to be a bad situation.
The report says the United States will head into recession in the short-term. It notes Japan is already there and says the economic situation in most other Asian countries is also deteriorating.
Europe, according to the report, is in a relatively good condition. But, even there, the economies of countries such as Germany and France are significantly slowing down.
Eisuke Sakakibara, the former Japanese minister of finance for international affairs, is attending the conference where the UNCTAD report is being discussed. He says he is afraid that the major industrialized countries are too concentrated on the fight against terrorism to focus on the needs of the global economy, which he says is in the worst condition it has been in since World War II. "I think this is a major turning point for the world economy, which only takes place once or twice in a century," he said. "And, I think, we need to recognize it."
Mr. Sakakibara says the focus on combating terrorism is justified. But he says it is essential that the world's wealthiest countries come up with a unified plan for saving the world economy. He says they should coordinate their monetary and foreign exchange policies so that the markets aren't destabilized. "Right after September 11, the Federal Reserve cut the interest by 50 basis points and ECB [European Central Bank] followed and Bank of Japan followed," he said. "But that was not a coordinated action. That was a unilateral action on the part of the Federal Reserve, followed by ECB, Bank of England and Bank of Japan. I think now is the time for those central bankers and ministers of finance to get together to coordinate their actions on the monetary fronts and foreign exchange fronts."
Yilmaz Akyuz is acting director for UNCTAD's globalization and development strategies. He says Latin American and Asian countries have been advised to follow austerity policies rather than stimulating their economies through expansionist measures similar to that of the United States. But Mr. Akyuz believes all countries should be encouraged to expand their economies.
"The response should be expansion everywhere in the South as well as the North," said Yilmaz Akyuz. "I am afraid that some of the developing countries are still advised to take austere policies and we think that is wrong."
UNCTAD says all the nations of the world, whether they are in the northern or southern hemisphere, should seek to work together to get the global economy through this difficult period.