Istanbul: World Bank chief Robert Zoellick warned on Friday that 2010 would be “a highly uncertain economic year” and said unemployment would continue to rise even as economic growth returns to much of the world.
“We’ve broken the fall of the financial crisis but it’s certainly too early to declare success. 2009 will continue to be a difficult year and 2010... a highly uncertain economic year,” he told reporters in Istanbul.
“Countries around the world, particularly low-income countries, are still suffering as the global economic crisis undermines exports, cuts remittances, curbs tourism and lowers their investments,” he said.
“We expect that unemployment will continue to go up and it’ll be slow in coming down.... When you have large-scale unemployment those at the bottom are hurt the most and have the least cushion,” he added.
Zoellick spoke as the US was due to issue a new monthly unemployment report expected to show the jobless rate rising to 9.9%.
Japan’s unemployment rate meanwhile fell to 5.5% in August from a record 5.7% in July in its first improvement in seven months.
Eurozone unemployment is now at 9.6%, EU figures on Thursday showed.
Inflation risks for Asia
China’s growth next year could be hit by credit strains and east Asian economies face the risk of inflation if they hold interest rates low, the World Bank chief said.
China “is going to face a challenge... because their credit growth has been very large and they’re starting to bring that back and that could have a potential effect on their growth later in 2010,” he told reporters.
He added: “If you look at the east Asian economies, you’re starting to get some signs of faster recovery but also potential inflation.”
He also said that if east Asian countries kept interest rates low in line with the US Federal Reserve “you could have some inflationary bubble effect.”