The UN Session on the Impact of the Financial and Economic Crisis
The following report concerns: "The UN Session on the Impact of the Financial and Economic Crisis." Among the topics discussed were the varying impacts for developed versus developing countries, the issues created by the economic crisis, and the need for reform.
The impact of the Financial and Economic Crisis on financing, trade, and economic activities (especially on GDP in developing economies) dropped by 3.2%. In developing countries it dropped by 2.1%. International trade declined by 13%. Global financial capital flows fell by 82%, and Foreign Direct Investments also dropped. Fiscal flows to developing countries dropped by 96% and the economies transition were most affected. Even resilient Latin American countries that had been a big source of financing were affected, including Asia Pacific. As a result, the emerging and developing countries may become the engine for economic growth in 2010. Foreign Direct Investments will not recover to the pre-crisis level.
The reform of the International Financial Institutions (IFIs) is more urgent now than before. Some of the suggested reforms include: new regulation and supervision schemes, new policies to increase the level and efficiency of Overseas Development Assistance (ODA), and a new focus on development. The social cost of the crisis outweighs the economic cost. The negative effects of the crisis on social variables, employment, and real wages shall outlive the economic variables. However, presentations and discussions at the UN so far focus on economic variables (especially at the macroeconomic level).
In times of economic crisis, the State off-loads its social responsibilities, which are often taken up by Faith Communities. In particular, there is a visible drop in funding for pre-natal, antenatal, and post-natal care.
There has been a visible escalation in all forms of illicit trade. In Asia, it is clear that there has been an escalation of sex trade and trafficking of human persons, while in Africa indebted countries that had been able to reach sustainable levels of managing their External Debt servicing, are sinking back (and others are acquiring new debts!).