SINGAPORE, Nov 13,(AFP) - The global economic recovery faces serious pitfalls including mass unemployment in rich nations, asset bubbles, and a lurch towards protectionism, world leaders warned Friday.
IMF chief Dominique Strauss-Kahn ruled out a "double-dip" recession in the United States once a huge dose of stimulus spending runs out. But he said the world economy would struggle to meet pre-crisis levels of growth for now.
The sobering assessment of the fragile status of world recovery came from top economic officials on the eve of an Asia-Pacific summit to be attended by US President Barack Obama, Chinese President Hu Jintao and 19 other leaders.
World Bank president Robert Zoellick said the spectre of inflation, and doubts over when massive government stimulus packages can be safely unwound, were other real threats.
"The reason I am flagging this issue is that we are in the stage of recovery where confidence is very important," he said at a business forum ahead of the weekend summit of the Asia-Pacific Economic Cooperation (APEC) group.
"If you have asset bubbles that are not properly dealt with, you could again undermine confidence in 2010, which is the year I am more concerned about."
Property and share prices have begun to froth again in Asia, but central banks have generally kept their interest rates low in line with the US Federal Reserve's ultra-lax monetary policy.
Although the US economy has returned to growth, unemployment nationally has breached 10 percent and analysts say it is set to rise further.
Once the saviour of the world economy, the US consumer cannot now be relied on and it is time for Asian exporters to remodel their economies to foster domestic demand, both Zoellick and Strauss-Kahn said.
APEC warns of pitfalls on path to global recovery
FE Team | Published: November 14, 2009 00:00:00 | Updated: February 01, 2018 00:00:00
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