Asia needs to play a larger role in the global recovery process as compared to previous downturn since most of US consumers are facing money crunch, says World Bank chief Robert Zoellick.
In an interview given to Financial Times, Zoellick said that it was indeed difficult to see US consumers trying to assume similar role as “demand drivers” that they had in earlier recoveries as they have to pay of their debts as well as improve their finances.
Said Zoellick in the interview which was given before his present visit to India, “The US consumer has to deleverage and has to rebuild savings,” he said. “This is one of the opportunities for Asia’s larger role in the recovery” in supplying more sources of demand, said Zoellick.
The World Bank president looked at China, India as well as other economies of Asia as the new engines of the present global progress against the existing backdrop of several developed nations that are still emerging from the recession.
Zoellick also says that in case employment remains in the US above 10% next year “you are going to see feedback effects,” “It’s going to increase delinquency for credit card debt, for consumer loans, in the US some commercial real estate is quite soft and that’s going to flow back into the banking system.” he warned.
” You will see some financial institutions doing very well but if they are dealing with the consumer retail market they will continue to be hit by those losses”, he said. He added that the world was awash with liquidity and that this posed a challenge to central bankers to some East Asian countries.”