We use cookies to provide you with a better experience. If you continue to use this site, we'll assume you're happy with this. Alternatively, click here to find out how to manage these cookies

hide cookie message
RSS FeedFinancial Planning

World Bank boss warns of ‘new danger zone’


Robert Zoellick says investors have lost confidence in economic leadership in Europe and the US

Article comments

International markets are entering a “new danger zone” as investors lose confidence in the economic leadership being shown in Europe and the US, according to the head of the World Bank Robert Zoellick.

Policy-makers need to take the recent market slump seriously and understand the severity of the situation, he told an Asia Society dinner in Sydney.

Zoellick said steps taken in the euro zone to deal with their sovereign debt crises and more general lack of competitiveness have tended to be taken “a day late” to ease investor concern.

He said there is likely to be a multi-speed global recovery, as an increasing proportion of worldwide growth comes from emerging economies and the traditional powerhouses of Europe and the US continue to struggle.

“What’s happened in the past couple of weeks is there is a convergence of some events in Europe and the United States that has led many market participants to lose confidence in economic leadership of some of the key countries,” he said.

“I think those events combined with some of the other fragilities in the nature of recovery have pushed us into a new danger zone. I don't say those words lightly.”

On the US, Zoellick said it wasn’t fears the world’s biggest economy faced an imminent problem, but “frankly that markets are used to the United States playing a key role in the economic system and leadership”.

He said efforts to cut US government spending have so far been focussed on discretionary spending as opposed to the entitlement programme such as social security. “Until they make an effort on those programmes, there is going to be continued scepticism about dealing with long-term spending.”

Zoellick said while market confidence has been hit, the real issue was whether this will spread to business and consumer confidence, something that was still unclear.

“What is different from the world of the past is now emerging markets are sources of growth and opportunity. About half of global growth is represented by the developing world... so this is a very rapid change in a relatively short span of time in historical terms,” he added.

On China, Zoellick said the appreciation of the yuan would be constructive, especially in helping tackle the country's inflationary pressure.

Share:

Recommended Articles

Comments

World Bank boss warns of ‘new danger zone’
Financial Planning

Could CFOs do more to boost shareholder value?

Could CFOs do more to boost shareholder value?

Working capital improvements start to pay off, but more could be donemore ..


Amazon slashes Fire Phone price ahead of iPhone 6 launch

Amazon today slashed the price of its three-month-old Fire Phone to 99 cents, an obvious bid to boost slow sales.more ..

Betfair mobile revenues spike during 'record' quarter

App use grows by 162 percent during World Cup periodmore ..

Samsung acquires cloud printing company PrinterOn

The acquisition aims to boost Samsung's business-to-business mobile offeringsmore ..

Can finance rise to the challenge of major transformation?

Outdated finance processes, systems and competencies leave too many questions unansweredmore ..

Budget: What business wants

CFOs are keen for the chancellor to avoid any uncertaintymore ..

Send to a friend

Email this article to a friend or colleague:


PLEASE NOTE: Your name is used only to let the recipient know who sent the story, and in case of transmission error. Both your name and the recipient's name and address will not be used for any other purpose.



In Depth
Can finance rise to the challenge of major transformation?

Can finance rise to the challenge of major transformation?

Outdated finance processes, systems and competencies leave too many questions unanswered more ..

In Depth
Interim CFO or consultant? The pros and cons

Interim CFO or consultant? The pros and cons

Ed Harding offers an insight into the life of an interim CFO and the advantages in driving transformation more ..

Advertisement

* *