The collapse of global financial markets have impeded economic growth and employment in developing countries. Widespread job losses has increased unemployment and pushed more workers into low-income occupations and working poverty. The declines in family and government revenue have affected children’s access to health services. This in turn has made children more vulnerable to mortality and morbidity. The economic slowdown has resulted in lower government earnings and revenues and a corresponding shrinking in the fiscal space available for public investments. While needing to help newly vulnerable populations, reductions in these and other revenues have reduced government’s capacity to fund crisis responses and maintain basic services such as health and education.
Increased efforts to generate employment will be an essential component of an effective response to the global recession in almost all developing countries. Keeping people in work, even on minimal incomes, helps to maintain essential household purchases and promotes social stability.
As government revenues decline it will be important to focus limited resources on essential health, education, and economic infrastructure services. Maintaining and increasing aid spending in education and health will have a positive impact on societies most vulnerable. It will, for example, reduce the pressures on children to leave school. Such assistance will also have an impact on the longer-term human capacity in developing countries by minimising serious regression or lags in basic education for the current generation of children.
The need for policy and regulatory reform to address the causes of the global recession is widely recognised. The global recession provides both an opportunity and a rationale to move more quickly to address overdue reforms, in areas as diverse as financial regulation, trade, competition and public sector improvement.
The recession is a global challenge requiring global solutions.
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