Elon Musk, Tesla Motors CEO, tells the Reuters Global Tech Summit that he'll talk to politicians who back local car dealers trying to keep Tesla from selling directly to consumers. Video
Zoellick warns finance rescues may hurt poor
MIANYANG, China |
MIANYANG, China (Reuters) - Wealthy nations must be careful not to cause more suffering to the developing world as they take bolder steps to boost their faltering economies, World Bank President Robert Zoellick said on Sunday.
Zoellick warned that poorer countries, already faced with mounting job losses, were vulnerable to the unintended consequences of policies crafted to rescue financial markets.
"Developed countries have guaranteed a lot of bank debt. It's actually made it hard for developing countries that had good budgetary programmes to be able to go to market and issue bonds," Zoellick said in an interview while touring the part of Sichuan province devastated by an earthquake in May.
"It's important for developed countries to recognize that at some point they're going to need exit strategies for these guarantees or be able to discipline them," he said. "I'm not saying that they should take that step now but otherwise developing countries will be bearing the brunt of this."
He also said international responses to humanitarian disasters, like the May 12 earthquake which killed more than 80,000 people, could be hampered by economic woes afflicting wealthy countries.
Zoellick said he feared that it would be difficult to replicate the outpouring of donations from around the world after the disaster.
The World Bank is hammering out the details of a $710 million earthquake reconstruction loan, its largest emergency loan ever.
The World Bank said last week that the global financial meltdown was weighing heavily on developing economies, forecasting 4.5 percent growth next year down from 6.3 percent in 2008.
"This financial crisis has moved to an economic crisis and next year it will be an unemployment crisis," Zoellick said. "It's going to be an extremely difficult phase."
He said that the recovery could be hindered if countries turned inward in an attempt to save their economies with little regard for others.
"I'm worried that the unemployment, particularly as combined with price discounting, could lead to waves of protectionism," he said.
While praising monetary expansion and fiscal stimulus in the United States and elsewhere, Zoellick said such policies could contain the seeds of future economic problems, adding that it would require discipline to rein them in down the road.
Along with potentially swollen budgets, developed countries could find themselves sitting atop another liquidity roller-coaster after injecting huge amounts of cash to get their clogged financial markets flowing again.
Loose monetary policy after the bursting of the dot-com bubble earlier this decade in part explained the credit boom and bust in the United States that sparked the current financial crisis, Zoellick said.
"You have tremendous liquidity now, much more than in 2001, so when the velocity of money picks up, the central banks are going to have to be able to absorb some of that liquidity," he said.
(Reporting by Simon Rabinovitch; Editing by Nick Macfie and Sami Aboudi)
- Tweet this
- Share this
- Digg this