risks in the recovering economy

World economy faces bank, bubble risks, says Zoellick

The good news is financial markets have broken the fall and there is a sense of revival in those markets, says World Bank president Robert Zoellick

Singapore: The global economy faces risks next year as rising unemployment may hurt banks and asset bubbles in Asia could undermine confidence, World Bank president Robert Zoellick said on Wednesday.

The good news is financial markets have broken the fall and there is a sense of revival in those markets, Zoellick said in a speech in Singapore. “Most expectations are for a relatively slow growth process. I am actually relatively comfortable about the prospects this year but as I look at 2010 we anticipate some risks,” he said.

The recovery won’t be symmetrical around the world, Zoellick said. Governments around the world should follow through with their current stimulus measures even as new stimulus packages may not be necessary, he said at a separate roundtable in Singapore.

Asian nations may still have time before they need to begin tightening policy even as the region, which is expected to grow faster than other parts of the world, may face inflationary pressures, Zoellick said.

The region must be vigilant on asset bubbles, and solutions won’t be easy to determine, he said. Policymakers should consider using other tools before raising interest rates to contain asset price surges, he added.

The global recovery in part has been fuelled by confidence, which may be undermined by asset bubbles, Zoellick said. Banks also face renewed risks as global unemployment rates rise, making it more difficult for consumers to repay loans, he said.

Are we heading towards another financial crisis? With economies on the road to recovery, we start to read about news of banks in the US going back to their old ways, giving huge performance bonuses to their executives. This is precisely what caused the sub-prime crisis in the first place. We have to be vigilant in order to prevent another such crisis from happening. I don’t think we can afford to have another such crisis in such a short span of time.

Shamim Adam / Bloomberg

  • font size

Singapore: The global economy faces risks next year as rising unemployment may hurt banks and asset bubbles in Asia could undermine confidence, World Bank president Robert Zoellick said on Wednesday.

The good news is financial markets have broken the fall and there is a sense of revival in those markets, Zoellick said in a speech in Singapore. “Most expectations are for a relatively slow growth process. I am actually relatively comfortable about the prospects this year but as I look at 2010 we anticipate some risks,” he said.

The recovery won’t be symmetrical around the world, Zoellick said. Governments around the world should follow through with their current stimulus measures even as new stimulus packages may not be necessary, he said at a separate roundtable in Singapore.

Asian nations may still have time before they need to begin tightening policy even as the region, which is expected to grow faster than other parts of the world, may face inflationary pressures, Zoellick said.

The region must be vigilant on asset bubbles, and solutions won’t be easy to determine, he said. Policymakers should consider using other tools before raising interest rates to contain asset price surges, he added.

The global recovery in part has been fuelled by confidence, which may be undermined by asset bubbles, Zoellick said. Banks also face renewed risks as global unemployment rates rise, making it more difficult for consumers to repay loans, he said.

Advertisements

0 Responses to “risks in the recovering economy”



  1. Leave a Comment

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s





%d bloggers like this: