NEW DELHI, Dec 3 – Asia will have to play a bigger part in the global recovery than in previous downturns as US consumers are cash-strapped, World Bank chief Robert Zoellick said in an interview published on Thursday.
Zoellick told the Financial Times it was difficult to see US consumers assuming the same role as demand drivers that they have in previous economic recoveries because they have to pay off debts and improve their finances.
"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 additional sources of demand, said Zoellick in the interview conducted ahead of his current visit to India.
The World Bank president is the latest to look at India, China and other Asian economies as new engines of global growth against the backdrop of many developed nations still emerging from recession.
Zoellick added that if unemployment in the United States remained above 10 percent 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 in some East Asian countries who needed to take steps to avoid the creation of "asset bubbles."
On Wednesday, the World Bank announced it would give India at least one billion dollars to help clean up the heavily polluted holy river Ganges as part of moves to sharply hike lending to the country.
India\’s finance ministry said the World Bank was expected to triple lending to the country to seven billion dollars this year for development, infrastructure and other projects.