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No slump for global economy
Source: Agencies |
September 7, 2011, Wednesday
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THE global economy is unlikely to fall back into recession but there are risks, World Bank President Robert Zoellick said yesterday.
"I don't believe that the United States or the world will go into a double-dip but there's high degrees of uncertainty," Zoellick said in Singapore.
The US is more likely to go through slow growth with ongoing high unemployment, he added.
His comments came after Singapore Finance Minister Tharman Shanmugaratnam, who also chairs a key International Monetary Fund committee, said the world is "more likely than not" to see a recession as growth in both the US and Europe have fallen to "stall" speed.
On Europe, the World Bank president said the European Union had to consider working closer in the area of fiscal policy to address the problems facing its members.
"One direction is to deepen the fiscal union," he said, adding the policies pursued up to now, such as the creation of the European Financial Stability Facility and bond buying by the European Central Bank, could only buy the EU time to address the problems it faced.
The Group of Seven financial leaders, worried about risks to global growth, are likely to agree this week to keep monetary policy accommodative, slow fiscal consolidation in countries where that is possible and implement structural reforms, a G7 source said.
Finance ministers and central bank governors of the G7 - US, Canada, Japan, Germany, France, Italy and Britain - meet on Friday in the French port of Marseilles to discuss what action to take to prop up the slowing global economy.
"The main issue will be the slowdown in the global economy and what is the best way to tackle that," a G7 official with knowledge of the preparations for the meeting said.
The source said the G7 countries sensed the global economy had entered the most difficult period since the collapse of Lehman Brothers and that there was a risk of recession - either in technical terms, seen as two straight quarters of contraction, or with positive growth but a widening output gap.
"I don't believe that the United States or the world will go into a double-dip but there's high degrees of uncertainty," Zoellick said in Singapore.
The US is more likely to go through slow growth with ongoing high unemployment, he added.
His comments came after Singapore Finance Minister Tharman Shanmugaratnam, who also chairs a key International Monetary Fund committee, said the world is "more likely than not" to see a recession as growth in both the US and Europe have fallen to "stall" speed.
On Europe, the World Bank president said the European Union had to consider working closer in the area of fiscal policy to address the problems facing its members.
"One direction is to deepen the fiscal union," he said, adding the policies pursued up to now, such as the creation of the European Financial Stability Facility and bond buying by the European Central Bank, could only buy the EU time to address the problems it faced.
The Group of Seven financial leaders, worried about risks to global growth, are likely to agree this week to keep monetary policy accommodative, slow fiscal consolidation in countries where that is possible and implement structural reforms, a G7 source said.
Finance ministers and central bank governors of the G7 - US, Canada, Japan, Germany, France, Italy and Britain - meet on Friday in the French port of Marseilles to discuss what action to take to prop up the slowing global economy.
"The main issue will be the slowdown in the global economy and what is the best way to tackle that," a G7 official with knowledge of the preparations for the meeting said.
The source said the G7 countries sensed the global economy had entered the most difficult period since the collapse of Lehman Brothers and that there was a risk of recession - either in technical terms, seen as two straight quarters of contraction, or with positive growth but a widening output gap.
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