Better and tighter international coordination of economic policies through a strengthened multilateral system offers the best route to overcome the current global economic crisis, economists said here Wednesday during the first session of the World Economic Forum Annual Meeting.

"We cannot underestimate the challenges and the dangers that we face in 2009," said Stephen S. Roach, chairman of Morgan Stanley Asia. "We are in a global recession the likes of which we have never seen. But there is no quick fix."

Next year may see some anemic growth, but it will not become a building block for further growth "without fixing the financial system and dealing with unsustainable global imbalances," Roach warned.

"To be effective, a multilateral financial entity needs teeth," Roach said, stressing the need for an enforcement mechanism, penalties for bad behavior, and some compromise from national authorities.

Justin Yifu Lin, chief economist of the World Bank, called for better coordination of fiscal measures.

"The whole world is a closed economy. Fiscal stimuli will not work if they are not coordinated," he said.

As developing countries face resource restraints, there must be some transfer of resources from the richer to the poorer for effective coordination, he added.

Economists at the session agreed that the multilateral financial system needs to be strengthened and fiscal packages must be coordinated at the international level.

Source: Xinhua