Transcript Responding to the Global Economic Crisis by Bob Harris

IMPACT OF THE CRISIS ON EDUCATION
REPORT TO THE EI EXECUTIVE BOARD
1-3 December 2009
UPDATE ON ECONOMIC DEVELOPMENTS
Bob Harris
Since March 2009
Financial markets have recovered significantly
Upswing continued in 2nd and 3rd quarters –
to October 2009
USA:Dow Jones 2005-2009
The German stock market
Consumer confidence plummetted to mid-2009
Then began to recover
An indicator of global trade:
Baltic Dry Index (BDI) 30 October 2009
TUAC trade union advisory committee to the OECD CSC commission syndicale consultative auprès de l’OCDE
1.190.000 hits for "recession is over“
Jul 25, 2009
The Recession Is Over
Slate
The Recession Is Over!
What America's best economic forecaster is saying.
By Daniel GrossPosted Tuesday, July 14, 2009
Sept. 15, 2009
Bernanke declares 'recession is very likely over'
Unfortunately, unemployment will come down
slowly
TUAC trade union advisory committee to the OECD CSC commission syndicale consultative auprès de l’OCDE
OECD composite leading indicators (CLI) show signals of recovery;
Paris, 6 November 2009
CLI for the OECD area increased by
1.3 point in September 2009 and
was 3.4 points higher than in
September 2008.
CLI for China increased by 1.6 point –
7.0 points higher than a year ago
But unemployment increased steeply in
Industrialized countries
OECD does not project much improvement in
employment in 2010 - 2011
TUAC trade union advisory committee to the OECD CSC commission syndicale consultative auprès de l’OCDE
Increasing unemployment despite “financial” recovery – the US as a
case in point
Unemployment rate, seasonally
adjusted, Oct. 2007 – October 2009
What recovery?
Unemployment Rate Rises to 10.2%, Offering Little
Reassurance to Job Seekers
And the impact in developing countries is dramatic
World Bank, 26 November 2009:
• 43 low-income developing countries are suffering from the combined effects of
the food, fuel and economic crises
• Financing shortfalls to cover core needs amount to $11.6 billion for these
countries
• 90 million more people will be living in extreme poverty, on less than $1.25
a day, by the end of 2010
Shanta Devarajan, World Bank chief economist for the Africa region:
“It took about six months for the economic crisis to hit Africa. Africa’s growth
rate dropped from 4.8% a year in 2008 to about 1% in 2009”
“One of the most disturbing statistics we found is that when you have these kinds
of growth slowdowns, infants die - you could lose about 30,000 to 50,000
infants before their 1st birthday”
Prospects for Central & Eastern Europe and Central Asia
The World Bank, 26 November 2009
No respite in sight for emerging Europe and Central Asia, says the region’s
Chief Economist Indermit Gill:
• Economic growth across the region – a negative 6% in 2009, with several
countries in the negative 10% range. Official unemployment has increased
from 8.5 million to 11.5 million. The actual number of unemployed may be
much higher.
• Fiscal deficits are expected to more than triple in some countries and force
governments to work with smaller budgets.
“Instead of the number of poor falling by about 15 million this year, it will
actually increase by almost 15 million. So we are seeing a big
difference of essentially about 30 million poor” says Gill.
TUAC trade union advisory committee to the OECD CSC commission syndicale consultative auprès de l’OCDE
Global Economic Prospects for 2010 – according to the IMF
TUAC trade union advisory committee to the OECD CSC commission syndicale consultative auprès de l’OCDE
Overview of the IMF-World Economic Outlook Projections for the G20
TUAC trade union advisory committee to the OECD CSC commission syndicale consultative auprès de l’OCDE
The IMF on unemployment
The IMF’s Chief, Dominique Strauss-Kahn:
Rome 30 October:
“There is some good news, but the crisis is not over.
There is no recovery until there is recovery of employment”
London 23 November :
“The global economy remains in a holding pattern - getting
better, but still highly vulnerable”
THE ILO:
THE FINANCIAL AND
ECONOMIC CRISIS:
A DECENT WORK
RESPONSE
Time-lags: Schematic comparison of stock markets, employment,
public revenues and public debt
Stock markets
Public revenues
Employment
Public debt
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Oct Nov Dec Jan Feb Mar Apr May June Jul Aug Sep Oct Nov Dec Jan Feb Mar
2008
2009
2010
G20
G20
G20
FINANCIAL TIMES
Europe Friday November 27 2009
Dubai sends markets into turmoil
THE WALL STREET JOURNAL.
Friday – Sunday, November 27, 2009
Dubai crisis shakes markets
LE TEMPS – Economie et Finance
Samedi 28 novembre 2009
“Dubai montre que la
crise n’est pas finie”
THE BIG THREATS TO
PUBLIC EDUCATION
Declining public revenues
“Exit strategies” to
reduce deficits
Dominique Strauss-Kahn, London 23 November
“Exit too soon, and you kill the recovery. Exit too late, and
you sow the seeds for the next crisis”
“Exiting too early is costlier than exiting too late”
“The old growth model is dead”
“The old model under which households in the USA and
elsewhere propelled the global economy with their voracious
appetite for consumption, is dead – or at least on its last legs”
“This shift would be helped by stronger social security
systems and higher spending on health and education”
PARADIGM CHANGE
From: Global imbalances
Inequity
Casino capitalism
To:
Decent work
Just transition to green jobs
Equity
Health and education
A paradigm for sustainable recovery
THE UNWANTED PARADIGM
Monetary easing of Oct – Dec 2008 created liquidity
Stimulus packages were financed by banks
Back to:
A new cycle of massive profit-taking
So: “Bank bonuses make a come-back”
The Wall Street Journal, 14 Oct 2009:
23 firms will pay $140 billion this year – back to 2007 levels
A new round of speculation – until the bubble bursts again
And this time, no more room for monetary easing
or fiscal stimulus !
THE FINAL WORD
EFA Global Monitoring
Report 2009