Monday, June 18, 2012

'Time Is of the Essence' in the Euro Crisis

Interview with World Bank President Robert Zoellick
World Bank President Robert Zoellick: "The ECB has bought time, but the time must be used."Zoom
World Bank President Robert Zoellick: "The ECB has bought time, but the time must be used."

World Bank President Robert Zoellick believes Europe needs to be more decisive in its response to the euro crisis. In an interview with SPIEGEL, he speaks of his sympathy for German reluctance to bail out its neighbors and explains why Chancellor Angela Merkel needs to take the lead.
SPIEGEL: Mr. Zoellick, as World Bank president your core mission is to promote developing nations. But currently we see developed nations in economic crisis while developing nations are booming. Has success in the global economy shifted?

Zoellick: Whether the issue is trade or development or investment, countries that used to be considered the 'third world' and cases for charity are now very influential players, such as China, India, or Brazil and parts of Africa. There still are many poor people in those countries, but their growth and their success can help. Developing countries have provided two-thirds of global growth over the past five years.

SPIEGEL: We are currently witnessing an economic slowdown, even in India and China. But emerging nations seem to be much less affected by the aftermath of the global financial crisis that has hit Europe and the US so hard.

Zoellick: Developing countries have recovered better, but they recognize the need to continue to adjust. Look at China: This is a country that had grown 10 percent a year for 30 years and yet Chinese policy-makers are recognizing that the current model of growth will not work for the next 30 years. So the Chinese are starting to consider changes, such as opening up the service sector, changing the nature of the state-owned enterprises and launching fiscal reforms. When this global crisis hit, many developing countries were quicker than developed countries in understanding the need for structural reforms. There is an irony that the need for structural reforms is well understood in emerging markets, but in the US and Europe, people are not paying enough attention to the need for structural reforms for future productivity.

Click here to see the entire inteview with the Spiegel

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