World Bank chief says Asia to have key role in recovery

Friday, December 04, 2009
NEW DELHI: Asia will have to play a bigger part in the global recovery than in previous downturns as US consumers are cash-strapped, World Bank chief Robert Zoellick said in an interview published on Thursday.

Zoellick told the Financial Times it was difficult to see US consumers assuming the same role as demand drivers that they have in previous economic recoveries because they have to pay off debts and improve their finances.

“The US consumer has to de-leverage and has to rebuild savings,” he said. “This is one of the opportunities for Asia’s larger role in the recovery” in supplying additional sources of demand, said Zoellick in the interview conducted ahead of his current visit to India.

The World Bank president is the latest to look at India, China and other Asian economies as new engines of global growth against the backdrop of many developed nations still emerging from recession.

Zoellick added that if unemployment in the United States remained above 10 per cent next year “you are going to see feedback effects.”

“It’s going to increase delinquency for credit card debt, for consumer loans, in the US some commercial real estate is quite soft and that’s going to flow back into the banking system,” he warned.