Miguel Fernández Ordóñez: Economic forecasts, measures to exit the crisis, and the Spanish financial system Opening address by Mr Miguel Fernández Ordóñez, Governor of the Bank of Spain, of the Cinco Días Series of Conferences, Madrid, 31 March 2009. *  *  *  Thank you very much for calling on me to inaugurate this series of conferences at a time burdened with challenges for economic analysis and economic policy. Given the scope of this conference, I shall address three matters of interest to the media: economic forecasts, the measures needed to exit the crisis and the current situation of the Spanish financial system. Economic forecasting has seen better days. Over the past 20 years, all institutions have been projecting high growth rates for the world economy in view of the benefits arising from increasingly integrated economic systems anchored firmly on free-market principles. Nobody could have conceived systemic market failings on a global scale such as those we are currently witnessing, and which are prompting a spectacular collapse in output and world trade. And right now, in the thick of the crisis, it is still difficult to prepare macroeconomic projections. But it is precisely in these circumstances when we most need such projections which, while they may well contain a large margin of error, are of use to us for assessing the juncture at which economies stand.
This option should become widespread, especially for those companies that have not participated in the negotiation of industry-wide or national agreements. BIS Review 43/2009  3  In addition to containing dismissals, these reforms should check the ongoing closure of firms. We should not lose sight of the fact that companies going to the wall entails sizeable decapitalisation costs. This is because it is companies that build up technological know-how and that have far-reaching knowledge of markets and of customer and supplier relationships. And this without prejudice to lifting administrative obstacles and thus ensuring that firms can be created swiftly and easily, so that when the recovery begins the momentum of demand translates into increases in activity and employment, and does not feed through to price rises. To improve the labour market situation, there is also a pressing need to promote new hiring to the full so that workers who have lost their jobs promptly find a way back into employment, avoiding the prolonged periods of unemployment that had such adverse effects in the past. True, creating new jobs depends above all on companies' expectations improving in respect of the demand for their products. But current hiring arrangements fall short on a series of characteristics which, at times of uncertainty such as at present, have adverse effects on recruitment decisions.