Developing countries at risk in fragile global recovery

Recovery from the global recession has been described as “fragile,” with a warning that there could be a “second decline” if economic stimulus programmes are phased out too quickly, and if unemployment is not reduced, speakers said at an annual high-level Unctad economic meeting in Geneva recently. Developing countries like South Africa are at risk because no major market is emerging for imports to replace the role previously played by the United States, according to Unctad secretary-general Supachai Panitchpakdi. Unemployment remains high in developing countries, and is increasing in places like South Africa. Banks came under fire for not lending to job-creating businesses, but rather making “healthy profits” mostly by trading. Louka Katseli, recently appointed Minister of Labour and Social Security of Greece, gave a special address in which she spoke of “widening unemployment and social exclusion” in Greece in the wake of the country’s debt crisis. In today’s global economy, Katseli said, “no single country can afford to mismanage its economy. The cost is too high.” In a panel discussion, Ali Badjo Gamatié, vice-governor of the Central Bank of West African States (BCEAO), said the world was in transition, although many don’t recognise it. How many financial crises are needed before the international community decides to change the global economic “software”? he asked. In Africa, the number of poor continues to grow, and governments in the West African Union are struggling with budget deficits that limit their abilities to combat poverty, especially during a recession. The region’s central banks have tried numerous measures to respond to the crisis, he said, but private banks are using the money provided simply to turn profits by trading rather than to fuel substantive economic growth.