Thursday December 18, 09:43 AM
World Bank head sees worldwide problem in 2009
By Bernice Han
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SINGAPORE (AFP) - The president of the World Bank warned Thursday of a worldwide struggle in the first half of 2009 as a deepening global economic crisis hits Asian countries.
Robert Zoellick also cautioned against a return to trade protectionism that could worsen the crisis.
"I am afraid that the first six months of 2009 are going to be a problem worldwide, including in Asia and including in Southeast Asia," Zoellick told a news conference during a visit to Singapore.
The Bank (NASDAQ: TBHS - news) said in a report last week that the Asia-Pacific (002790.KS - news) region remained reasonably well-placed to weather the global slowdown but will see growth ease to 5.3 percent in 2009 from 7.0 percent this year.
It said the global economy would expand a mere 0.9 percent next year and world trade volume would fall 2.1 percent, the first drop in 26 years.
"In the discussions that I have had with people around the world, no one has a very good prediction for the length and depth of this crisis," Zoellick said.
Government monetary and fiscal policy, as well as open trade systems, will determine whether the situation can improve later next year, he said.
"Particularly I am concerned about the rising dangers of protectionism," he added, describing as "unfortunate" the difficulties encountered during the Doha Round of talks on a new global trade pact.
"The international system needs to stay on offence on trade because protectionist forces will raise their heads," he said.
The so-called Doha talks started at the end of 2001 in the Qatari capital. They aim to boost international commerce by removing trade barriers and subsidies, but a deal has proved elusive.
Developing countries, including China and India, want the industrialised world to scrap agricultural subsidies, while Western powers are seeking greater access for their products in emerging markets.
"Whatever parties can do to try to get the Doha Round back on track would be vitally important," Zoellick said later at a dialogue session with students from a local university.
"This financial and economic and unemployment problem is serious enough.
"If we start to trigger a round of protectionism, as you saw in the 1930s, it could deepen (the global crisis)."
Pascal Lamy, the head of the World Trade Organisation (WTO), last Friday scrapped plans to hold a ministerial meeting on the trade talks, citing the "unacceptably high" risk of failure and dashing hopes that the long-delayed global trade pact could be clinched this month.
The World Bank, which provides financial and technical assistance to developing countries, said last week that healthy growth in recent years had left major economies such as China in good shape to fight the global crisis with macroeconomic measures.
But it said "in the near term, downside risks are substantial" due to recessions in developed markets.
Zoellick, who was recently in China, said that country's leaders expected to see a decline in growth because of the global slowdown but that they were struck by the sharpness and the depth of the fall in exports.
The World Bank forecast 7.5 percent growth for China next year, which would be its slowest in nearly two decades.
Zoellick was in Singapore to sign a memorandum of understanding with the city-state to strengthen and expand collaboration on development assistance.
"Singapore and the World Bank Group intend to play a positive and growing role in helping countries tackle critical policy challenges especially in the area of urban management," said a statement from Singapore's foreign ministry.
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