Global News
SINGAPORE—World Bank President Robert Zoellick said he doesn’t believe the U.S. and world economies will lapse back into recession, but he said anemic growth is likely for now.
In a news conference Tuesday, Mr. Zoellick repeated his warnings that European leaders must urgently address risks to euro-zone sovereign debt, and said China and India face challenges in responding to the weakened economies of the West.
U.S. leaders should tackle overhauling the tax code and should be more aggressive in negotiating trade deals, Mr. Zoellick said. But he made a distinction between those long-term concerns and the crisis Europe is facing.
“Europe has reached a point where I think the challenges for its leadership are more imminent. In the United States, I don’t mean to suggest these problems can be deferred forever, but they’re not quite as market sensitive,” Mr. Zoellick said in a joint news conference with Singapore’s deputy prime minister, Tharman Shanmugaratnam, who is also the city-state’s finance minister.
Mr. Zoellick spoke to reporters during a visit to Singapore in which he announced an expansion of World Bank services in the city-state.
Mr. Zoellick said bond-buying by the European Central Bank can buy time, but fundamental changes are needed to get Europe’s cash-strapped economies on a sound footing. “We’re reaching a key decision point for European leaders,” Mr. Zoellick said, noting that the bond-buying has revealed tensions between euro-zone countries.
Separately, Mr. Zoelllick told CNBC the liquidity-support measures currently employed by the European Union and the ECB won’t be enough to stem the region’s banking and sovereign debt crisis.
“They’ve tried to pump money into it, they’ve tried in the past month … the ECB bought a lot of bonds, but I think dealing with these problems through liquidity measures will not be sufficient,” he said in an interview with the news channel.
Singapore’s Mr. Tharman said the city-state’s economy could see some slowdown as the world economic outlook remains uncertain.
The Singapore government last month revised its target range for 2011’s gross-domestic-product growth to 4.5% to 6.5%, down from 5% to 7%, due to heightened global economic uncertainty.
“In the short-term we’re not going to be immune to a slowdown of the major drivers of the global economy,” Mr. Tharman said. “The center of gravity of the world is still the U.S. and Europe, so some slowdown is now very likely.”
Mr. Tharman added that Singapore has the fiscal capability to deal with short-term knocks to the city-state’s economic growth, but the main focus will center on dealing with the medium-to-long-term challenges of improving the nation’s productivity.
Write to Martin Vaughan at [email protected], Sam Holmes at [email protected] and Gaurav Raghuvanshi at [email protected]
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By: Martin Vaughan, Sam Holmes, and Gaurav Raghuvanshi
Source: The Wall Street Journal, Sept. 7, 2011
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