Global economics: Instability in sovereign debt markets still poses threat to supply chain recovery

image
By Patrick Burnson, Executive Editor
May 27, 2010 - SCMR Editorial

As reported in SCMR yesterday, a new report from the Organization of Economic Cooperation and Development, trade flows are ramping up.

Instability in sovereign debt markets, however, pose a serious risk to a global economic recovery. It has highlighted the need for the euro area to strengthen its institutional and operational architecture. Bolder measures need to be taken to ensure fiscal discipline, said the OECD report.

“Several countries are already taking early action to enhance the credibility of their fiscal consolidation plans and this is very welcome,” said OECD Secretary-General Angel Gurría.
“This is a critical time for the world economy.”

He added that coordinated international efforts prevented the recession from becoming more severe but that significant challenges remain.

“Many OECD countries need to reconcile support to a still fragile recovery with the need to move to a more sustainable fiscal path,” he said. “We also need to take into account the international spill-overs of domestic policies. Now more than ever, we need to maintain co-operation at an international level.”

With a huge debt burden weighing on many OECD countries and the strengthening recovery, the emergency fiscal measures provided by governments to tackle the crisis must be removed by 2011 at the latest, the OECD report stated. It adds that the pace of such action must be appropriate to particular conditions and the state of public finances in each country.

To support growth as budgets are being tightened, macroeconomic, financial and structural policies need to be linked, said OECD spokesmen. Spending cuts or tax rises should focus on areas that are the least harmful to growth, they added.

According to the report, fiscal rules could enhance the credibility of plans to strengthen public finances. Reforming product and labor markets to enhance competitiveness must also be part of the strategy.



About the Author

image
Patrick Burnson
Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at .(JavaScript must be enabled to view this email address).

Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

The Pacific Maritime Association (PMA), representing employers at 29 ports, and the International Longshore and Warehouse Union (ILWU), which represents 20,000 dockworkers, have come to a tentative agreement on a key issue in ongoing contract negotiations.

Diesel prices continued their ongoing decline, with the average price per gallon falling 6.7 cents to $2.866 per gallon, according to data issued this week by the Department of Energy’s Energy Information Administration (EIA).

Unlike other shipping companies, the Postal Service is not implementing any new dimensional weight charges with this pricing proposal

Drewry is expecting the recent spate of freight rate volatility to continue.

For November, which is the most recent month for which data is available, the SCI came in at -3.2. While this is still entrenched in negative territory, it represents an improvement over October and September, which were -5.5 and -6.6, respectively.

Article Topics

News · Supply Chain · Finance · Trade · All topics

About the Author

Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review. Patrick covers international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. Contact Patrick Burnson

Comments

Post a comment
Commenting is not available in this channel entry.