The recovery from the current economic downturn is fragile, speakers at a United Nations event said today, warning that a second downturn may occur if countries do not coordinate their responses, if economic stimulus plans are phased out too quickly and if unemployment is not reduced.
Efforts to rejuvenate the banking and financial sector to stimulate the broader economy have not had the desired result, Supachai Panitchpakdi, Secretary-General of the UN Conference on Trade and Development said in Geneva today.
Banks are turning healthy profits, he said, but mostly through trading. The institutions are not lending to businesses that might use funds to expand production or hire more workers.
Mr. Supachai was addressing this year’s high-level segment, focusing on the theme “Towards sustainable recovery,” of UNCTAD’s Trade and Development Board.
Many of the jobs being created in developing countries are in the informal sector and provide neither the long-term security or higher wages than can stimulate domestic demand and economic growth, he said.
The official cautioned that no major import market has emerged to replace the United States, and that a lack of coordination – including at the Group of 20 (G20) level – threatens economic recovery.
The Board, whose annual session kicked off today, guides UNCTAD’s activities from year to year.