German Chancellor Angela Merkel and the leaders of five top international organisations, including the International Monetary Fund (IMF) and the World Bank, have expressed concern over the "uncertain outlook" for the world economy and pledged to cooperate more closely to promote growth and employment.
"Global economic recovery continues to drift along an insecure course and the outlook is very uncertain,"they said in a joint statement on Tuesday evening after a meeting in Berlin.
They called for decisive steps by the industrialised countries to ensure fiscal consolidation coupled with structural reforms to restore the confidence of the financial markets and improve outlook for growth and employment.
The meeting was attended by IMF Managing Director Christine Lagarde, World Bank President Jim Yong Kim, World Trade Organisation (WTO) Director General Pascal Lamy, Organisation for Economic Cooperation and Development (OECD) Secretary General Angel Gurria and International Labour Organisation (ILO) Director General Guy Ryder.
The world economy is facing huge risks of a downturn, the statement said.
According to forecasts by the IMF, it will grow by 3.3 per cent in 2012 and by 3.6 per cent in 2013.
The debt level in most of the industrialised countries are still unsustainable and unemployment in several countries has reached new heights.
As a result of the subdued outlook for growth and huge uncertainty, confidence of the financial markets has not returned to the level before the financial crisis erupted in 2009, the statement said.
In order to restore the confidence of the financial markets and to improve the outlook for growth and employment, “decisive measures must be taken to consolidate the budget along with structural reforms,” the statement said.
Chancellor Merkel and the heads of the five global financial and economic institutions agreed that the efforts to overcome the euro zone debt crisis must be stepped up through implementing comprehensive reforms for more growth and competitiveness, which will strengthen the monetary union of the 17-nation single currency bloc.
They called upon the United States to make a “credible" effort to achieve fiscal consolidation.
The emerging nations, which contributed significantly to the global economic growth, should aim to achieve a sustainable growth and orient their economic and fiscal policies towards reducing the global imbalances, the statement said.
They identified five areas of cooperation to improve the outlook for growth and employment.
Fostering innovation, improving education, strengthening competition and reforming health services and labour market will continue to be important responsibilities of the industrialised and emerging nations, they said.
Merkel and the leaders of the international institutions said they welcomed the efforts of several euro zone countries to increase their competitiveness and to consolidate the budget.
This contributed to a growth in investors’ confidence in these countries, they said.
Further efforts will be needed to create new employment opportunities for young people, to promote structural reforms and to build up an efficient social security system, they said.
They expressed disappointment over the deadlocked Doha round of the WTO negotiations and suggested that if a comprehensive agreement is not possible, negotiations must be continued and brought to a conclusion at least in those areas where an agreement is close.
Combating climate change and protecting natural resources posed a major challenge for mankind, they said while stating they also presented new opportunities for growth and employment.
They suggested that the potential for promoting development with reduced Co2 emissions and through “green growth” must be explored by implementing specific cooperation projects between the industrialised and developing nations.