Meaningful structural and social reforms, as well as a major shift to alternative energy sources, are needed for a sustainable new global economic cycle, says the head of the Organization for Economic Co-operation and Development.
Angel Gurria, the secretary-general of the OECD who spoke on the first day of the Conference of Montreal on Monday, pointed to the fact that aid to the developing world has been slipping.
“We are seeing now for second year in a row a drop in the flow of aid to developing countries. This is very serious. This is very unfortunate,” Mr. Gurria said at a news conference after his presentation. “I think we have to organize a better flow of aid.”
He also said that a concerted shift to green energy would help spur the economic recovery.
“We are on a collision course with nature and cannot continue to promote an economic growth based on highly polluting energies and overconsumption. Instead, we can move to greater energy efficiency by implementing smart structural reforms,” he said in his speech.
But he later acknowledged that making the shift won’t be easy, given how reliant on fossil fuels still shaky national economies are, especially in the developing world.
Meanwhile, Barclays Bank PLC chairman David Walker told the forum that bank bashing is unhealthy and counterproductive given the central role the world’s financial institutions play in the economic recovery.
“What I refer to as ‘knocking the bankers’ has become a political and media industry,” Mr. Walker said in his presentation to the annual gathering of business people, politicians, economists and academics.
Banks are essential in extending credit in both the public and private spheres that will help speed the recovery, he said.
The global banking sector has been under the gun for its role in the financial meltdown and Barclays and other institutions have been criticized for large executive bonuses. Barclays has also been caught up in scandals related to allegations of price-fixing.
Mr. Walker acknowledged that “the banks bear a major responsibility” for the financial crisis and some of the regulatory measures being implemented are overdue.
Others at the conference said the global economy is slowly getting back on track.
“You are seeing definite signs of a recovery globally,” said Jeffrey Orr, president and chief executive of Power Financial Corp. “The United States has got great signs of momentum. They’re not out of the woods by any stretch of the imagination but there’s a lot of returning consumer confidence. The construction sector is doing very well. I think Europe is a few years behind that and they’ve got some issues still to deal with,” he said in an interview. “I think you do have the base here for the global economy starting to come back. The big questions will be: Monetary authorities, how quickly do they start to pull back on the very loose monetary policies?”
James Bullard, president and CEO of the U.S. Federal Reserve Bank of St. Louis, said low inflation rates in the U.S. may warrant continuing the “aggressive” asset purchase program to fuel growth and cut unemployment.